Part 3
Scott was certainly right in saying that everyone was well aware of what had been going on.  Throughout the late spring and summer the trade journals had kept readers posted on the candidates' maneuvers.  "Political Jugglery to Prevent T.H. Bowles from Becoming the Next President of the National Association," the Ohio Underwriter announced in an article dated May 13, 1897.  "The action of the Wisconsin Association of Life Underwriters, at a meeting last week, in endorsing J.S. Norris, general agent of the Phoenix Mutual Life, as its candidate for president of the National Association of Life Underwriters...makes the state of affairs awkward, to say the least," the writer began.  He then proceeded to explain some of the motives behind the move:

At the last meeting in Washington it was tacitly understood that Mr. Bowles would be the next president.  He ran a close second in the voting, and would undoubtedly have been elected had it not been the custom to select the president from the city in which the annual meeting is held. Mr. Bowles is general agent of the Mutual Life for Wisconsin, and also has an interest in the New Orleans general agency.  He is one of the leading general agency lights of the country.

Readers of the insurance papers will remember a year or so ago the pitched contest which ensued in Milwaukee, by means of the daily press, between Mr. Bowles and D.E. Murphy, general agent of the Northwestern Mutual Life, over the mooted question as to which company gave the better dividends. ...Mr. Murphy got "soaked," as the saying goes.

This episode caused a bitter personal and business rivalry between the two men and when Mr. Bowles was accepted as the logical candidate for the presidency, Mr. Murphy saw a chance to get even and took advantage of it. ...

It is generally expected that in view of the circumstances the official candidate of the Wisconsin association will be overlooked and that Mr. Bowles will receive the support and votes of the delegates at large—as a rebuke to the "ward-politician" methods inaugurated at the recent meeting, if not from a full appreciation of Mr. Bowles.

In a later issue the same journal asserted that some of Bowles' opponents felt "that no Mutual Life man should occupy the president's chair, because that company was believed to be in spirit antagonistic to the anti-rebate compact."[xix] It was well known that, though he had joined the compact, Richard A. McCurdy, president of the Mutual Life, entertained strong reservations about its effectiveness.  He had been severely criticized for saying as much even before the compact was proposed.  "In my judgment the remedy lies with the agents exclusively," he stated in an article appearing in 1892.  "When they seriously determine that the practice shall stop, it will stop. ..To its solution the local and national associations of life underwriters should be aided in every practicable way.  It is for them to devise the means, if there be any.  I feel sure that the companies, with few exceptions, will back them up."[xx]*[xxi]

Whatever the motives behind the Norris candidacy, the episode created unfortunate publicity for the NALU.  Generating negative feelings on all fronts, this scrambling for the presidency stirred up dissension within the ranks, distracted the association from it's important work and weakened its image before the rest of the industry.

On May 22, 1898, Ben Williams died.  At its next meeting on August 16 in Minneapolis, on the eve of the NALU's ninth convention, the Executive Committee elected Register to complete Williams' term.

The West Hotel served as headquarters for the convention, but the sessions were held at Century hall.  Not surprisingly, a number of speakers at this convention found occasion to refer to the Spanish-American War.  In his speech of welcome to the delegates, for instance, the president of the Minneapolis association, Frank M. Joyce, mentioned a recent naval engagement to illustrate the value of fraternal feeling among association members:

There has been a growing feeling...out-cropping in our various insurance journals, that the life insurance associations have ceased to accomplish anything of practical value and that these annual conventions are nothing but friendly reunions...accomplishing no good whatever.  I do not agree with this sentiment...The underwriters' associations have accomplished more in the last five years for the life insurance profession than have all the laws that have been enacted by the various states.

In that magnificent squadron of American vessels lying off the southern coast of Cuba there were two of the great cruisers that are the pride of the American people, the Brooklyn and New York.  Between the crews of these two vessels there is the most intense rivalry and jealousy.  So much so that the officers and crews are hardly on speaking terms when they meet off duty.  Yet, when Hobson's bottle was uncorked and the Spanish fleet attempted to escape, all differences were forgotten in the great anxiety to destroy the common enemy.  So...let us unite our forces against the common enemy and forget the bitter rivalries among ourselves.[xxii]

Not all the trade journals were so critical of the associations as Joyce's opening reference might suggest.  One of the principal speakers at this convention was Philadelphian F.C. Oviatt, editor of the Intelligencer, who stressed the positive influence of underwriters associations on the public image of the business. "There have been mistakes, and some of the work is rough and uncouth," he said, "but there has been progress.  Rebating has been lessened. Twisting is not so often boasted of as formerly.  Nasty literature is steady growing more unpopular.  Several companies now refuse to furnish agents with literature that reflects upon rival companies.  They say their goods are valuable enough to sell upon their merits."

Far too many agents, however, still promoted sales by maligning rival companies and agents, both in sales interviews and in print. Misrepresentation and casting of aspersions had developed very early in the competitive marketing of life insurance.  As competition became more heated, some companies engaged journalists to publish attacks on rival companies.  Numerous pamphlets and articles appeared "demonstrating" inferiority of products offered by other companies.  By the 1890s the more respectable companies had dropped such crude methods.  Among unscrupulous agents, however, disparagement of rival agents and companies remained part and parcel of their rhetorical baggage.

One especially offensive practice casting a shadow over the integrity of the life insurance business was "twisting" (inducing a policyholder to surrender his policy and buy one from another company to take its place).  It is not inherently wrong, of course, for an agent to urge someone to purchase demonstratively better protection for his money when his current coverage is patently inferior and inadequate.  That kind of replacement was always understood to be acceptable behavior.  In such cases the agent served the consumer's interest.  Twisting, however, is wanton, wholesale replacement of perfectly good policies by deceptive means for no other reason than to gain a commission.  The practice was pervasive and, usually the newly purchased policy was in no way better.  Besides, the money already invested was often lost to the policyholder who found himself left with an inferior policy, after all.

In 1895, during the last moments of the Philadelphia convention, James S. Norris, then president of the Wisconsin Association, had proposed a motion that won the unanimous approval of the delegates:

Resolved. That it is the sense of the National Association of Life Underwriters that the "twisting" of policies (except from assessment associations) is unconditionally condemned as vicious and as an unwise practice, and is dishonorable, and should be condemned by all honorable representatives of life insurance.

According to the "Preface" to the Proceedings of the Minneapolis convention, "The most important resolution adopted was that condemning in emphatic terms the practice of twisting policies from one company to another.  The sentiment on this question was crystallized through the efforts of President Bowles."  Not only did Bowles devote much of his opening address to the subject, but he had also written a pamphlet exposing the evils of twisting, which was widely distributed.

There was no quixotic vagueness in Bowles' view of "twisting."  In his address to the convention, he was explicit about its detrimental effects as he was harsh in his denunciation of the practice:

For some years past one of the worst evils in the field work of life insurance has been the practice by some agents of undermining the faith of the assured in whatever company he might be insured, and by specious argument to induce him, if possible, to change his insurance to another company; a practice probably more particularly indulged in by the agents of the larger companies towards the business of the smaller ones.  The unfortunate but general lack of knowledge of the insured...makes it readily possible for the agent of questionable methods, avaricious to secure a commission, to work great loss and injury to the insured, and to the business of life underwriting as a whole, by transferring policies from one company to another; and I have thought it...an important subject, deserving of the special consideration which has been given it during the past year, with most gratifying results.[xxiii]

The delegates chose Richard E. Cochran, a general agent for the United States Life and a member of the New York City delegation, as Bowles' successor and confirmed Register's chairmanship of the Executive Committee.  Cochran's cherubic face and genial gaze belied his true character.  He would prove one of the NALU's most energetic presidents.  And persuaded by its accessibility by rail and the beauty of Niagara Falls, the delegates unanimously agreed to meet a year later in Buffalo.

The Executive Committee held its midyear session in Philadelphia on February 15 and 16, 1899.  As Register reported later, blizzard weather, causing many to be snowbound, prevented a full attendance.  "Indeed, it was a question whether a quorum would arrive," he said.  Only eleven members were able to get there.

The NALU's financial status received some attention at this meeting.  The lapsing of associations combined with late payments from others had sometimes left the treasury without sufficient operating funds.  The committee reiterated the need for prompt payment of the $25 dues exacted from each association, plus $1.00 for each additional member when membership exceeded twenty-five.

The inclement weather taught the committeemen a lesson.  They decided to ask for an amendment to the bylaws to hold midyear meetings at least four months before the annual convention, rather than be confined to a date six months following a convention.  Other matters discussed included the problem of reduced membership, further refinement of the rules governing the essay competition and unveiling of a silver prize to be offered for the second best essay, the Ben Williams Memorial Vase.

At the Minneapolis convention, the delegates had unanimously adopted a resolution calling for modifications in the rules governing the anti-rebate compact.  According to the original instructions to the referee, every complaint against an agent had to be first submitted to his company, which would investigate the charge before turning the case over to the referee.  The intent was to discourage agents from filing unwarranted charges that could not be substantiated.  At the midyear meeting William Scott, chairman of the special committee to communicate with Referee Thomas B. Reed, reported that Reed had agreed to hear complaints about rebating directly from associations, without the necessity of having the charges filed through a company.

The Executive Committee also voted to act on the suggestion of W.G. Justice of Buffalo to invite the London (Ontario) Association of Life Underwriters to the next convention as observers, and to recommend admitting the newly formed women's association at Boston into the national organization.  The group had been organized on November 29, 1898 at the Parker House by fifteen women who met in response to the invitation of Miss Emily A. Ransom, Colonel Ransom's daughter.

The NALU held its tenth annual convention at Buffalo's Hotel Iroquois on July 12-14, 1899.  Many, however, had to seek accommodations in other hotels.  The sessions met in the hall of the Women's Educational and Industrial Union which, we are told in the reported Proceedings, "was beautifully decorated for the occasion, and was pronounced to be the pleasantest room that the convention had yet been held in."

At that time there were twenty-six local associations affiliated with the NALU representing a total membership of 940 agents.  This represents a considerable reduction from what membership had risen to several years previously.  (In 1894, for example, there were thirty-eight affiliates, and in 1897 the combined membership of local associations peaked at 1,337.)  Owing to an escalation of company rivalry, as well as internal strife, the association movement had lost momentum during these years and was struggling to stay alive.  Even so, the "Preface" to the Proceedings stated that this convention was "one of the most successful since the organization of the national body.

"Primarily much enthusiasm was inspired by President Richard E. Cochran," the reporter explained, "who did yeoman service throughout the year, traveling about extensively among the local associations, endeavoring to instill into the minds of the lukewarm members the value of association work both to the business at large and the members individually.  That his efforts met with good results was seen in the large attendance at the annual meeting as well as noticeably increased interest in advocating good practices in the business."

This was no idle boast.  Cochran's impressive record in reversing the fortunes of the NALU was generally acknowledged.  Reporting on the Buffalo convention in its July number, the Western Underwriter editorialized:

Beyond a doubt the National Association of Life Underwriters has been infused with new life under the administration of President Cochran.  It is no secret that after the Minneapolis convention of last year, the outlook was considered by many as extremely dubious.  President Cochran at once recognized the situation, and with characteristic energy began the work of regeneration.  In this he was eminently successful.  The association today occupies a strong position, and its future outlook is very promising...There is no reason why, during the coming year, the membership of the local associations should not be enlarged, and many more field workers brought within the sphere of their influence.

Commenting on Cochran's leadership thirty years later, Charles Scovel concluded, "If Plummer was our Washington, who did the most to form and establish this union of locals associations, then Cochran was our Lincoln, the leader in preserving the union and giving it truly national solidarity."

As Scovel also observed, the anti-rebating agreement was not proving as effective as some reformers wished.  Its machinery for prosecuting agents, one writer commented, had become somewhat of a farce.  In February 1897, the Ohio Underwriter had reported, "Ex-Speaker Reed, referring to his $3,000 fee as referee for the life companies, recently remarked, 'It is only when a man is drawing a salary for doing nothing that he feels he is at least receiving what he really deserves.''' But Reed probably exaggerated the ineffectiveness of the compact.  Proschansky notes that the Standard published in its issue of July 16, 1898, a list of convictions by the referee since the signing of the agreement, totaling twenty-nine.  About 80 percent of the complaints filed with the referee resulted in convictions.  It concluded that the anti-rebate compact was effective.[xxiv]

Certainly no one could claim that the company compact had delivered a decisive blow to rebating.  Ironically, it was the NALU that unwittingly hastened the dissolution of the compact when it proposed a radically different approach to the problem.  In his opening speech at Buffalo, Cochran reiterated the association's unremitting warfare against rebating, provoking considerable discussion that ended in the passage of a resolution requesting the companies to reduce first-year commissions and increase renewals—thus removing the incentive to offer rebates.

It was a courageous move, and it seems to have taken the industry by surprise.  The Western Underwriter commented, "The meeting of the National Association of Life Underwriters last week at Buffalo was made memorable by the resolution... Suffice it to say there is considerable difference of opinion among the companies as to the efficacy of the proposed arrangement."[xxv]

The response from some quarters was perhaps more emphatic than the leaders of the NALU intended.  The Equitable not only adjusted its commissions but in September of that year James W. Alexander, the company's new president, also announced his withdrawal from the agreement.**[xxvi]

Many thought Alexander acted hastily, but as R. Carlyle Buley, in his history of the Equitable, points out, "The new commission plan had not been inaugurated abruptly and without thought; it had previously been recommended by the National Association of Life Underwriters and approved by various groups of Equitable agents."[xxvii] In a letter to Referee Reed, subsequently published in the various insurance journals, Alexander presented his case:

Bonuses for given amounts of business, and the high rates of commission that have prevailed on first year's premiums seem to make rebating easier than it should be, and the cure would appear to lie in a discontinuance of bonuses, and such arrangement of commissions as would make it against the interest of any one to buy regular assurance with a view to dropping it at the end of the first year.  Even if this reform involved the possible risk of losing a certain amount of new business, and therefore, a sacrifice of apparent volume (which we seriously doubt), nevertheless, believing that it is a step that should be taken because it is right, and further believing that the business we get will be better and more permanent, we have determined to adopt the policy above indicated; in fact, we have done so, and we are glad to say that our agents have approved of our action.[xxviii]

Alexander's action drew sharp criticism from the officers of the New York Life who insisted that no company had the right to withdraw from the compact without the consent of a majority of the signing companies, and that such withdrawal could only result in debauching the business.  Vice President Darwin Kingsley of the New York Life stated:

We are not prepared to surrender; on the contrary, we were never so much in the mood to insist on every restriction and every regulation now in force against rebating.  Our position was taken in '93.  When the agreement of November '95 was entered into, it wasn't a "reform" so far as we are concerned; and, consequently now that that particular agreement has gone by the board, we haven't got to advertise any new reform.  Our position wasn't changed when we went into the agreement.  It will not be changed now.[xxix]

But there were other motives at work, as Buley notes:

Though officers of various other companies expressed their approbation of Equitable's new commission plan, the New York Life thought it saw an opportunity to raid the Equitable agency force...[and] informed its agents...that they should seize the golden agent.  The coup did not work out too well, however, for on January 8, 1900, Second Vice President Gage E. Tarbell of Equitable gave a dinner to about 170 New York City agents of the New York Life and signed up all but three of them. [xxx]

Agent raiding was not uncommon.  The episode only represents one of many exchanges of fire in the battle of the Big Three, which raged throughout the period.

Less controversial, but equally laudable were some other innovations inaugurated at the Buffalo convention.  Evidently, this marked the first appearance of Canadian agents at an NALU gathering.  In his speech of welcome, Seth Bush, president of the host association, said:

It is most fitting that we should have with us at this time, representatives from across the border, men prominent in the business of life insurance in the Dominion.  They have heard of the organizations represented here, and wishing to be with us in all matters which mean progress and fraternity, they have come to observe and learn from us, that they may return prepared to organize and give to the business across the lakes the benefits of cemented friendships and united organizations.

If in the future we may revert to this occasion as the happy beginning of an international understanding and compact of our profession, we shall indeed be glad, and we of the local association be proud that here in Buffalo at our invitation, there first came to us Canada's representative insurance men....[xxxi]

"For the first time in the history of the association," the reporter noted, "there were women delegates present, representing the New England Women's Life Underwriters' Association.  By an amendment to the constitution this association was admitted to auxiliary membership."  Immediately after Cochran's opening speech, Plummer said:

The presence of such a representation marks what may be the beginning of a new epoch in the history of life insurance.... The members of the National Association are yearning this morning to place upon record their greeting, and so I move you, sir, that all the courtesies of this convention be extended to the representatives of the New England Women's Life Underwriters' Association of Boston.

The resolution was adopted by a rising vote.  In response, Mrs. M.A.F. Potts, the group's president, expressed the hope that "our addition to your membership will not be a draw in any way, but perhaps, as Mr. Plummer has suggested, we may help to uplift the association to a higher plane than it has ever reached before."

Part 1

Part 2

Part 3

Part 4

Part 5

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

A Royal Commission Investigates Life Insurance Operations in Canada

A Period of Growth and Visibility for the NALU Under Strong Leadership

The NALU Plays a Leading Role in Insurance Education

The NALU During World War I

Chapter 3

The Post-War Decade

The NALU's Extension of Activity

The Agents Move for Recognition

Chapter 4

The Depression and Aftermath

Annual Conventions and Midyear Meetings

The NALU Celebrates Its 50th Anniversary

Chapter 5

The Agents Earn Their Wings

World War II

The NALU Joins the Industry in Legislative Battles

The NALU Establishes the National Quality Award

Chapter 6

Controversies and Schisms (1946-1956)

The Foundation of LUTC

The Nola Patterson Affair

GAMC Formally Organized

Chapter 7

The NALU Goes to Washington

Dispute Over Minimum Deposit Insurance Plans

GAMC Stages First LAMP Meeting

The NALU Celebrates Its Diamond Jubilee Year

The NALU Increases Political Activity

U.S. Senate Antitrust and Monopoly Subcommittee Investigate Life Insurance

The NALU Responds to Consumerist Activism

Chapter 8

The NALU Reaches the Century Mark

FTC Releases a Study Critical of the Insurance Industry

Formation of the Women Life Underwriters Conference

Drop in Local Membership

The NALU Issues Statements on AIDS

The NALU Combats a New Wave of Attacks

The NALU Celebrates a Century of Service

Open Book

Book Marks

[*]Bowles seemed destined for controversy. In 1902 he was dismissed by the Mutual of New York for "insubordination." According to Mutual historian Shepard Clough, "He at once began to make charges against the company, to circularize policyholders in an effort to get proxies, and to stir up trouble generally. He did succeed in getting several persons to complain to the management about dividends, but he was ultimately silenced by a commutation of his renewal commissions."

[**] "The new commission scale provided for 25 percent on the first year's premium on a ordinary life policy, 15 on the second, 5 on the third, the fourth and 5 on the fifth, and for a specified number of years thereafter, as per hte individual agent's contract."

[xix] Ohio Underwriter, September 16, 1897, p.8

[xx] Proschansky, Op. Cit., pp. 130-131

[xxi] Shepard B. Clough, A Century of American life Insurance, Columbia University Press, New York, 1946. p. 216

[xxii] Proceedings, 1898, p. 12.

[xxiii] Ibid., p. 25.

[xxiv] Op. Cit., p. 128

[xxv] Op. Cit., July 20, 1899, p.11

[xxvi] Ibid., p. 552

[xxvii] Op. Cit., p. 554

[xxviii] Insurance Monitor, XLVII. October 1899

[xxix] Buley, Op. Cit., pp. 553-554.

[xxx] Ibid., p. 554.

[xxxi] Proceedings, 1899, p. 19.

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