AT/Open Book/Voices From the Field


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	Voices From the Field • Chapter 1 • Chapter 2 • Chapter 3 • Chapter 4 • Chapter 5 • Chapter 6 • Chapter 7 • Chapter 8 Short Takes Book Marks


















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To anyone attuned to the global situation, there was no doubt the United states was bracing itself for war. Hitler had invaded Poland in September 1939. Within days Britain and its allies had declared war on the Third Reich, and once again a good percentage of the wold's population was involved in deadly combat. It looked like 1914 all over again. Yet there were differences. "Unlike President Wilson in 1914," Buley points out, "President Roosevelt in his proclamation of neutrality did not ask the people of the United States to remain neutral in thought as well as in deed. With American opinion far more united against the Axis powers than it had been at the beginning of world War I it was apparent from the beginning that the United States would not be neutral in thought or probably even in deed."[xiii]

In September 1940 Congress passed the first peacetime draft act of our history (the Burke-Wadsworth Act.) Shortly before the enactment of the draft act the second Revenue Act of 1940 was amended in conference committee to include provision for National Service Life Insurance (NSLI). This entirely separate system. It made all persons who served in the armed forces after October 8, 1940, eligible to purchase policies from a minimum of $1,000 to a maximum of $10,000 face value. The government would bear the waiver costs resulting from the extra hazards of war. Buley explains the reaction of the insurance industry to such solicitude on part of government:

Despite the fact that the National Service Life Insurance was enacted without consulting the life insurance companies, it was accepted by them with little discussion or criticism. This was in striking contrast to the reception given the War Risk Life Insurance of World War I. Life insurance men no doubt had in mind the terrific lapses which took place among the policies issued in World War I and correctly assumed that the situation would be no different this time.

Also in October 1940 was enacted the Soldiers and Sailors Civil Relief Act, which in its insurance provisions was almost identical with the law of 1918. A person in service might apply to the Veterans Administration for relief of payment of premiums on his life insurance held with private companies to the amount of $5,000 face value; the Veterans Administration would take care of these premiums by means of certificates to the insurer. If within a year after leaving military service the policyholder did not meet his premium payments, the policy or policies would lapse and the cash surrender value be used to meet the amounts advanced by the government. There was a general feeling…that there would be a high persistence rate.[xiv]

In 1940 there were 444 companies in the United States with a total of $117,794 billion life insurance in force. Payments to life insurance beneficiaries amounted to $995 million. There were 364 active life underwriters associations with a membership totaling 32,458.

Harry T. Wright associate agency manager for the Equitable in Chicago, succeeded Zimmerman as president of the NALU. Zimmerman recalls that John Witherspoon, who was from Nashville, tried to interfere and have himself put into the office of NALU president, arguing that since Zimmerman resided in Chicago, it was against the tradition of "a geographical spread" to have two successive presidents form the same city. Paul Sanborn who always took an active interest n NALU politics, intervened, however, and with his usual diplomatic smoothness made certain that his friend Wright was not excluded form the list of nominees.

Called the NALU's fieldman president," Wright's thirty-three-year career had been a remarkable one. Since 1924 he had sold at least $1 million of insurance each year, and had served as chairman of the Million Dollar Round Table in 1935, Holgar Johnson remembers Wright as quiet and mild mannered. "He wasn't terribly dynamic, but he was a very fine general agent and a good believer in the life insurance business; in its function as an indispensable expression of love of family." Barnes remembers that in every hotel room where he was staying for an important occasion, he insisted that there be a grand piano (preferably white). "He would sit in a white robe and play the piano with elegantly manicured hands," Barnes relates. "He played very badly. He did this chiefly when people were coming into the suite. It set the stage for the rest of it. The most unlikely pianist that you ever saw, but this was his pose and he loved it totally."

At the annual meeting of the American Life Convention that year, Wright made a strong appeal for "Better Partnership" between agents and life company officials. He listed six bases of cooperation for the coming year. "It is my feeling," he said, "that most companies could very profitably counsel with the representative personal producer to a very much greater degree than they do now. You might not always get the answer you hoped for, but you will get the answer form the man who is actually on the firing line and understands pretty well what is best for the policy holder."

To improve relations between companies and the field forces, he asked companies to:

consult with representative personal producers;
cancel the large number of outstanding contracts of unproductive, unfit and part-time agents who are constantly tearing down the prestige of the representative life underwriter;
consider the agents' perspective when making policy decisions;
describe to the Agency Practices Agreement; and
adopt retirement plans for the field forces.

Finally, he brought to the company executives' attention that part of the report from the NALU's Committee on Agent's Compensation which dealt with "not and increase, but an adjustment of commissions, giving the representative agent the credit he deserves."

Cincinnati was the site of the 1941 NALU convention. Convention chairman Eric Johnson of Pittsburgh (Holgar Johnson's brother) was largely responsible for producing his muscle-flexing convention which caught the industry in a mood of confident prosperity as the nation braced for war. "Completely in tune with the Nation's great defense effort," reported Life Association News, "militantly facing the problems of the life insurance business and of the citizens of the United States, the 52nd annual convention of the National Association swept through a triumphant and decisive week in Cincinnati from the time it opened on Monday, September 5, until it closed on Friday, September 19…From the beginning to the end the convention epitomized its theme: 'American Life Insurance-An investment in Freedom'."

Having waited patiently in the wings for a year, John Witherspoon was elected president of the NALU for the 1941-1942 term. A southern aristocrat and the son of a prominent Nashville physician who had served a term as president of the American Medical Association, Witherspoon had a reputation for his warmth, genial manner and probity. Addressing the members of the American Life Convention at their October meeting in Chicago, Witherspoon pointed to the patriotic spirit evinced by the associated agents during the past year. "When President Roosevelt declared a national emergency and launched the defense program" he noted, "the life underwriters were anxious to take part in this work. They saw industries all about them expanding with defense orders; many of their friends were working night and day to help the government keep its long-range schedule on time.

"They also understood," he continued, "that life insurance, more than any other instrument at work in this country attains two fundamental human freedoms so necessary today—freedom from want and freedom from fear. They saw that their job was to play a part in making America economically strong so that it and its people would have the power to withstand whatever shocks they may face in the future."

The result of this eagerness to serve, he explained, was the NALU's Life Underwriters' Committee for National Defense Savings. Offering their services to the Federal Treasury, the agents volunteered to do what they could to advance the sale of National Defense bonds. Their assignment was to install regular payroll allotment plans in businesses throughout the country. In only three months, he said, sales had passed the $3 million mark. [xv]

It is one of the tragically ironic facts of economics that the war usually brings prosperity. Illustrating the point once more, the coming of war brought the United states out of its ten-year depression. Workers in war industries earning higher salaries began buying ordinary life insurance rather than industrial. "After the official entry of the United States into World War II in December 1941, there was a veritable surge in the buying of life insurance." Buley comments. "December sales were some 48 percent above those of the same month of the proceeding year."

After an illness of more than five months, Roger Hull, managing director and general counsel of the NALU, died on January 23, 1942. A victim of cancer, he was fifty-six years old. The NALU Board of Trustees, in paying tribute to his years of service stated, "It was in the role of spokesman for the institution of life insurance, and for the underwriters who represent it, that he was best known and will be most fondly recalled by the great majority of National Association members. …Mr. Hull's work in connection with legislation and court decisions affecting life insurance and life underwriters will forever remain a testimonial to his consummate skill and tireless energy."

The search was on for a replacement. Obviously, it would have to be someone with administrative ability, acquainted with the business and, hopefully like Hull, someone with legal expertise. Finally, on July 9, 1942, Witherspoon wired members of the NALU Board of Trustees: "Jim Rutherford accepts position to head national association at seventeen thousand five hundred subject unanimous approval of board."

A native or Arkansas, Rutherford had taken his B.A. degree at the University of Arkansas in 1922. Three years later he received his LL.B. from Arkansas Law School, graduating at the head of his class. Meanwhile, he had entered the real estate business, and before his retirement form that work in 1931 had been president of the Arkansas Real Estate Association and author of the real estate license law of that state. In 1931 he entered life insurance with the Penn Mutual in Little Rock and served as agent and supervisor with that agency until 1933 when he spent a year as the company's special home office representative in Nashville. After becoming general agent for the Penn Mutual in Des Moines early in1934, Rutherford had taken an interest in Iowa legislative activity. Since the end of 1940, he had headed Penn Mutual's agency in Seattle.

By a change in the bylaws, Rutherford's title became "executive vice president." As the headquarters staff regrouped under a new director, Hoffman assumed the title managing director, Jones became editor and executive secretary, and Donald Barnes was named director of research and a member of the Association's executive staff. Yet in wartime all arrangements are tentative. Within a year Barnes joined the Army Air Force to serve for two and a half years as a master sergeant.

Owing to economic restraints and other limitations imposed by the war, the NALU staged a no-frills convention in1942. Association leaders met in August for a "business meeting" at Chicago's Edgewater Beach Hotel. In his report to the delegates, Witherspoon acknowledged especially the work of Zimmerman and his committee during the hearings before the House Ways and Means Committee and the Senate Finance Committee on the 1942 Revenue bill. Despite all its efforts, however, the life insurance lobby could not prevent the nation's legislators from striking the $40,000 exclusion form the tax law. Faced with this defeat, industry leaders planned a new campaign to have the exclusion restored, Witherspoon told the delegates.

By this time there were thousands of former life insurance agents in uniform. Many provided invaluable service to fellow military personnel in Personal Affairs units. Offering counsel and guidance, helping with the form-filling paperwork, they facilitated billpaying, the drawing up of wills, insurance purchases, and myriad details about their personal and financial arrangements. Naturally, they always stressed the urgency of purchasing the maximum of National Service Life Insurance.

Donald Barnes who trained recruits for the Army's Personal Affairs program at their center in New York, described the activities of this concentration of uniformed agents in an article written for Life Association News:

It sounds like the kind of idea a life underwriter might think up—and it was. …This one started with a single officer in the room in Washington. The officer was John D. Marsh, former general agent for the Lincoln National Life in Washington, and a past president of the Life Underwriters Association of the District of Columbia. …
In the beginning, the task was clear-cut—to assemble a group of men who could do a sincere, careful job of advising the soldier on the personal matters that perhaps no other section of the Army was equipped to discuss with him. And so John Marsh began to gather assistants from the best source he knew: the life underwriters.[xvi]

Grant Taggart, agent for California-Western States Life at Cowley, Wyoming, was elected president of the NALU for the 1942-43 term. He was greatly admired, not only for his impressive sales record in a remote and sparsely populated section of the country, but also for his personal warmth.

His disarming cow-poke drawl could be deceptive; he was an energetic and shrewd business man. "Grant Taggart was a great personality and an inspiring speaker who did much to educate others in the life insurance business,' says Holgar Johnson. 'He was probably the most human personality we've ever had in the business. A leader in the Mormon church, he was a very dedicated man of strong character. A role model for so many aspiring young agents, he could relate many experiences from having sold insurance out in an part of the country where you wouldn't think anybody could sell anything. An astute crowd-pleaser, he made many speeches as president of the National Association. Everybody respected him. I don't think I ever heard anybody say anything other than laudatory things about Grant."[xvii]

Pointing with pride to the agents' contributions to winning the war, Taggart told the members of The American Life Convention in the autumn of 1942:

In the ten months since Pearl Harbor, over 20,000 life underwriter volunteer minutemen have helped to discharge their responsibility to their government through sales and pledges of nearly one billion, five hundred million dollars' worth of war savings bonds and stamps, principally through salary saving plans in over 50,000 businesses and industies.[xviii]

A good deal of Taggart's administration was given to traveling around the country, promoting the NALU's programs for involving agents in the war effort. As an extra boost, he made a nationwide broadcast over the CBS network from station KIRO in Seattle on the evening of April 12. "The program," Life Association News reported, "which lasted fifteen minutes, was under the auspices of the Treasury Department. In his talk, President Taggart gave a picture of the united effort of the insurance industry toward winning the war and urged the life underwrites of America to get behind the Second War Loan Drive."

Membership in local associations naturally suffered during the war, dipping as low as 29,130 in 1942. "As a result of the failure to be classified as an essential industry, life insurance lost heavily of its personnel during the year, " Buley observes in his history of the Equitable. "because of the uncertainty of their status, many office and field workers who in all probability would not have been disturbed in their jobs took jobs in war industry." The next year there was a slight improvement. As of August 1943, membership in 193 local and 24 state associations came to 29,274. That year Chicago with 1858 members had the largest life underwriters association. The second largest, New York City, had the largest life underwriters association. The second largest, new York City, had 1,717 members. The 1,400 delegates attending the NALU's 54th annual meeting at the William Penn Hotel in downtown Pittsburgh elected Hervert A Hedges of Kansas City, Missouri, president for the coming year. "The Million Dollar Round Table recorded the highest membership in its history and, under the chairmanship of Ron Stever of Los Angeles, enjoyed a well-balanced program," Life Association News reported.

Foreword by Alan Press, 1988-1989 NALU President

Preface by Jack E. Bobo, 1989 NALU Executive Vice President

Introduction

Acknowledgements

Chapter 1

Laying the Foundation—A Meeting at the Parker House

Leading Figures—Ransom, Carpenter, Blodgett and Plummer

Conditions Leading to the Foundation of the NALU

Rise of Modern Life Insurance and the General Agency System

Issues and Accomplishments of the First 15 Years

Chapter 2

In the Wake of the Armstrong Investigation