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THE GREEN BAG

priety of the expenditure of the Society's money for the giving of a public dinner by two of its directors to a recent French Ambassador. As to this matter, however, it is plain that the questions involved are of fact rather than of law. If officers of cor porations appropriate the funds of the in stitution and use them to defray the expenses of personal entertainments which they give their friends, they commit gross breaches of trust. If, however, as is claimed to have been the case here, the object of the expenditure was to advance the efficiency of the Society in France, and to bring it favorably to the attention of the French Government and people, and particularly, if, as has been claimed, the result of the expenditure has been the favorable recogni tion of the Society by the French Govern ment, and the building up of a large and profitable business among the French people, there would seem, upon an application of the ordinary business standards of to-day, to be little ground for just exception to the use made of the Society's money. It would doubtless be most desirable if life insurance companies spent nothing for adver tising, and if the moneys thus saved could be applied to the reduction of premiums paid by their policy-holders; but these in stitutions have from the very beginning been in the habit of expending large sums in this manner to advance and increase their business, and if the desired result is attained, the necessary expense has been looked upon as well laid out. Whether the course of the officers of the Equitable in engaging in the underwritings above mentioned has or has not been culpable seems to depend upon the facts in each instance. Newpapers have appeared in their discussion of the matter to assume that securities were sold directly by the officers concerned in the underwritings to the Society, and a good deal of ready-made

law has been cited as to the effect of sales by directors or trustees to their companies, of property which they had purchased at a lower rate for the purpose of reselling. But the situation here is different from that. In the case now under consideration certain banking houses had undertaken to float certain issues of investment securities. As is customarily done in such cases, the bankers first organized underwriting syndi cates, composed of persons who agreed to take the securities at a certain figure, pro vided the banking house did not succeed in disposing of them at a higher rate to the public. If any portion of the securities were not taken by the public, the under writers agreed to take and pay for their proper proportion thereof. If, on the other hand, the securities were all sold on the public offering, the underwriters were to receive as profits the difference between the price at which they agreed to take the securities and the price at which the same were disposed of to the public. The Equit able bought some of such securities on the public offerings from the banking houses which offered them for sale. Some of its officers at different times were members of different syndicates which underwrote bonds subsequently so purchased by the Society. There was, therefore, no direct dealing be tween the Society and its own officers, and the question of the propriety of the trans actions, so far as the latter are concerned, evidently depends upon the question of fact as to whether they knew that the Society would or could be persuaded sub sequently to buy the bonds, and whether they were induced to bring influence to bear upon the Society to make such pur chases by reason of their own interest in the underwriting. These are questions upon which the proof, if any, has not been made public. NEW YORK, N. Y., May, 1905.