THOUGHTFUL FACTS, 
AND 
INTERESTING REMARKS, 
PROVING 
The American Popular Life Insurance 
Company Solvent, 
AND 
DR, LAMBERT “NOT GUILTY.” DR LAMBERT “NOT GUILTY.” 
“ Offers to Show ” the American Popular Solvent. 
Extract. Court of Oyer and Terminer, New York, Dec. 10, 1878. 
Q. (Hon. IVm. Barnes.)—Were the valuations of the pol- 
icies of the American Popular made at the actual age of 
the policyholders ? A. (Mr. McCall.)—Yes, sir. 
Q. Did the Department debit the Company with the 
net value of the policy at the actual, instead of at the 
graded ages? A. Yes, sir. 
[That is to say, if the Company graded a person of 35 at 20, so 
that he would not pay any reserve, the policy was charged by the 
Department with just the same reserve as if the Company had taken 
a premium of 35, including a reserve.] 
Q. You debited this Company precisely to the same ex- 
tent as if it had charged full standard premiums the same 
as the Mutual Life of New York? A. Yes, sir. 
Q. You made the premium reserve include the old poli- 
cies instead of the premium policies of the register, did you 
not ? A. Yes, sir ; it was including those policies changed. 
[That is, the Department, in cases in which policyholders had 
changed their policies, either for their own or for the Companies’ 
advantage and. thus the State reserve was reduced, took the liberty 
of making the reserve the same as it was upon the old policies, 
although no good could justly result to the policyholders, and great 
harm certainly would if the status of the Company was broken 
up. The act was, first, without lawr ; second, without any found- 
ation in reason ; third, wicked,—because attended by insinuations 
from the Department that the policyholders had been wronged, 
and because against the interest of the policyholders.] 
Q. Assuming that the rejections were wrongfully made, 
the result would be that this Company was solvent, would 
it not? [Objected to as immaterial.] 
Q. Assuming that all the business of the Company was THE AMERICAN POPULAR SOLVENT. 
graduated between premiums and risks* the same as policy 
379, of which we gave the figures the other day, and that 
the gross premium actually received by this Company, was 
only enough to carry the Term risk, I ask you whether it 
is equitable that the Company should be charged with a 
policy reserve ? A. [Objected to, yet answered.]—No, sir. 
Q. That is, whether the total of the assets of this Com- 
pany would not be a surplus or the property of the stock- 
holders, instead of being that of the policy-holders, they 
never having paid for these ? [Objected to.] 
Mr. Barnes.—We offer to show that the actual gross 
premiums received by this Company were only sufficient to 
carry the current yearly risks of the Company. [Objection.] 
Mr. Barnes.—We offer to show by an understanding be- 
tween the stockholders and policyholders of this Com- 
pany (to wit, the policy), that the policyholders were only 
to pay enough to carry their current risks. [Objection.] 
Mr. Barnes.—We offer to show by expert testimony, and 
by this witness, that by the correct valuation of policies in 
cases where the premiums are according to the policy regis- 
ter, no liability could be properly charged against the Com- 
pany excepting $50,000. [Objection.] 
[If the Company was solvent, which the witness, McCall, was re- 
luctantly compelled to allow, and, for iniquitous purposes, was 
thrown into the hands of a Receiver as insolvent, the attack upon it 
was an outrage, and with the continued assaults upon it and up- 
on its officials has been one of the foulest blots upon the conduct 
of public affairs that has ever dishonored this State.] Thoughtful Facts, 
The “objections” to the Hon. Win. Barnes’ “offer to show” 
above noted, of course indicate substantially that proof of the Com- 
pany’s solvency was imminent and vindicating Dr. Lambert. 
As he was not allowed to demonstrate his actuarial, legal 
proofs of his allegation that the Company was solvent when it was 
raided, a few Facts may be here adduced which will be another 
form of proof—moral proof, and perhaps more generally convinc- 
ing ; forceful in deductions, they are coincident with but one tlie- 
orjr, to wit, that Dr. Lambert worked honestly and faithfully for 
nearly eleven years, at merely living compensation, in the service 
of the stockholders and policyholders; that he misrepresented noth- 
ing, but told the truth so plainly that it did not suit those who 
wish to make life insurance business expensive ; and that the Com- 
pany was solvent when raided. 
Fact *1.—In 1868 the following was published in a work explana- 
tory of the Company: 
“ This Company wras organized in 1866 to present not merely new 
features, but new principles and methods, not invented for novelty 
nor for the emolument of individuals, but for the correct working 
out of Life Insurance.” 
The object of the officials was not to make life insurance 
cheap; they were obliged to “make a virtue of a necessity;” their 
business was primarily to measure correctly each risk ; its small- 
ness in best grades made economy essential, and prohibited 
temptation to embezzlement and extravagance,—the natural 
offspring of large “ reserves.” Small premiums and attendant 
economy were then the necessary results of applied science, 
not a growth from moral feelings, nor from a benevolent longing 
to promote the welfare of man, and to strike down those who 
are robbing the insured through the device of “reserves,” not 
to reform the business socially nor morally ; but the object was 
to apply and test the science of Biometry, and the resulting low 
premiums to best grades, and the economy, wrere necessary in- 
cidents. The Company was pure stock, transacting business for 
profits, and being most decidedly coincident with the interests of 
the best grade risks, while all the other companies were as de- 
cidedly adverse to their interests, it pleased those in whom life 
insurance profits do most indwell. Ought they not to have one 
company in their favor ? 
Proving Company Solvent, Dr. Lambert “not Guilty." THE AMERICAN POPULAR SOLVENT. 
Fact 2.—It proposed; {a) to grade applicants according to then- 
risk; (b) to insure them without their paying “reserve;” (c) to rebate 
premiums of those yearly examined ; (d) to be economical. 
Remark. The above two facts show that the public has been mis- 
led into confounding this Company with others, the wrong doing of 
which had become conspicuous, and which this Company was 
adapted to outroot. 
Fact 3.—Its deaths among all grades were not half as numerous 
in proportion as those of other Companies. 
Remark. It has been enviously asserted (showing where the shoe 
pinched), that this was caused by reporting policies not taken, which 
error is outcast by the facts, 4 to 8 inclusive. 
It is also said that the deaths among the “not taken policies ” are 
not known nor ratioed; but corresponding to deaths in first year in- 
surance, the ratio would be microscopic. It is falsely sgid that 
“ numerous claims contested were not counted.” Only one in seven 
was contested per average ; the year the ratio was least every claim 
was honest and paid. The claims contested were counted, as the 
State Reports will prove; that nails that . If the number of “not 
taken policies ” had been twice that which was stated, and the 
deaths among them twice as numerous as in the old policies, and all 
counted, the ratio in best grades would not then have been one- 
fourth, nor in all grades together one-half, what they were in other 
companies. (See Remark on fact 8.) That shoe must therefore 
continue to pinch. It is of no use to try to evade the truth, there 
is a great difference in the vitality and longevity, the Viability of 
different men, and it is easily determined. 
Fact 4.—Among the rebated risks (the very best) there was not 
one death in ten years. (This was never advertised, it was too good.) 
Fact 5.—Among the insured examined personally by Dr. Morris 
(Surg.-in-Chief), there was not one death, by Dr. Roof but one, by 
Dr. Thompson not one, by Dr. Graves not one, by Dr. Lambert 
(10 years) but two. These were the salaried experts of the Com- 
pany, the first four employed from two to five years. 
Fact 6.—But two deaths occurred among those insured within 
the last four years. 
Remark. The last three facts show how correct and easily appli- 
cable the principles, the science and art of Biometry are. 
A recent article upon Dr. Lambert, written for the Prattsburgh 
News, by Dr. Nelson Sizer, of this city, is to the point, and as his DR. LAMBERT “ NOT GUILTY. ” 
intelligence, years, and peculiar experience, being also disinterested, 
make him the very best authority, the opinion of Prof. Sizer 
as found in the following extract, should have much weight : 
“ Of one fact I have no doubt, viz : that the other companies 
have a strong and special interest to break down the Dr.’s company, 
and silence him, because he was the founder, or at least the persist- 
ent promoter of a new method of taking risks on lives. 
Other companies insure everybody who can pass a medical exam- 
ination, at a given rate, which is based on certain general aver- 
ages. Some, of the men so accepted have constitutions which will 
carry them from thirty - to fifty years of age—others, surround- 
ed by the same influences, will reach eighty. Now it is evident 
that the one who has only twenty years more of life in his con- 
stitution should pay four times as much premium on a thousand 
dollars of insurance as the man who is to live fifty years. 
Doctor Lambert professed to be able to tell who among a 
hundred men had such constitutions, had a reasonable prospect of 
reaching eighty years, and who with equal health at thirty would 
not be likely to go beyond fifty. This he doubtless could do, and 
consequently he made low figures for those who had a prospect 
of long life, and charged those men more whose prospect of life was 
much less, and these would of course go to other companies. The 
result was, the best patrons of other companies began to complain 
of the high rates charged as contrasted with the low rates charged 
to them by the American Popular and a strong desire must have 
existed to crush the Popular lest it become too popular ; and in 
these times of sharp business practices, it would be very easy to 
surppose a conspiracy to convict Dr. Lambert might be formed. 
In this matter of estimating a person’s probable length of life, 
and therefore what it ought to cost to insure him, Dr. Lambert is 
right, and the principle set forth by him ought to be respected and 
and put in practice. The extra-good risks, pay too much.” 
Fact 7.—The State Reports show that in no one year did this 
Company receive half as much premium money for the same assur- 
ance as any other Company did ; not one-third the average, and in 
the last four years not one-fourth. 
Remark. It is said that small premiums induced its condition 
Not so; see Facts 4 and 12, and remarks. Much smaller 
could have been made to best grades, and would have been an- 
other year. That was one cause of the animus of this attack of 
the companies whose only competition was to get this one out 
of the way, and then say to complainers, “ See what small prem- 
iums do ; the officials of the American Popular did not steal a 
cent, and were very economical, but they did not get enough 
premiums,—better pay more and be safe.” THE AMERICAN POPULAR SOLVENT. 
Fact 8.—The Referee, in his report upon a large class of policies 
carrying $1,432,950 assurance, states that there were $220,850 as 
premiums paid upon them. They average eight years. 
Remark. The two previous facts, show not only that the prem- 
iums were very small, but that the death losses were not half as 
numerous as in other Companies, or the Company could not have 
gone on as it did. The $220,850 which the Referee mentions, would 
not in any other Company half pay the death losses on that assur- 
ance for that time. This certainly proves that the Company owes 
those policies nothing ; they owe the Company (the officials in par- 
ticular) a debt of gratitude for making their wiiole cost not half what 
their death loss cost could have been elsewhere. Yet it is actually 
suggested to the Supreme Court and to those policyholders that they 
should divide the funds in the Company’s treasury, in proportion to 
their “reserves” computed by the State for its purposes. What right 
have they to this fund ? Did they pay it, or any part of it ? 
It -would certainly be confiscation for the law- to be interpreted as 
saying that the Company ow es to policyholders a “ reserve ” which 
it never received from them. 
Opinions of the most able men and oldest officials. 
“Dear Sir: * * * A policyholder cannot justly have any 
right to a “reserve ” to which he has not contributed. * * * 
Yours truly, Oliver Pillsbury, Ins. Com. N. H.” 
“ Dear Sir: * * * I entirely concur with Mr. Pillsbury. 
* * * Yours, &c., Henry C. Kelsey, Ins. Com. N. J.” 
“ Dear Sir : * * * The interest of a policyholder in the 
“ reserve ” should be determined by the ratio of his contribu- 
tion to it. * * * Respectfully yours, 
Stephen H. Rhodes, Ins. Com. Mass.” 
“ Dear Sir: * * * A policyholder having paid so small a 
premium that it includes no “reserve,” has no rightful claim to 
any “reserve.” * * * Yours truly, 
Wm. Ew-ing, Dept. Supt. Ins. Ohio.” 
Others of the same tenor might be added, but as there is not 
a single dissent, nor a looking toward one, the point may be as- 
sumed as well taken and conclusive. (A sheet of them can be had) DI{. laJibert “not guilty.” 
The yearly cost was the criterion of the amount of premiums, 
except in the case of a few policyholders ; there were therefore gen- 
erally no “ reserves ” taken, hence none owing to policyholders, and 
the fundx of the Company, except, as Mr. Barnes said, $50,000, 
belonged to the Company. A square, easily understood business. 
Fact 9.—There were constantly in the office, and at the time of 
the “ injunction,” many scores, yes, hundreds of applications for 
policies, and many policies in agents’hands, which would have been 
instantly taken at the ordinary or a little lower premium. 
Remark. This fully accounts for the large number of “not taken 
policies.” It shows that policies were rated upon principle, and 
that money was in comparison no object. That Fact outcasts all 
the assertions,- taunts, aspersions, and falsehoods against the 
Company and its officials. Is it possible that these would stand 
blind and deaf to Entreaty holding out its money, unless a sound 
principle and integrity ruled their minds ? Would either official 
have refused if he was so corrupt as to commit a crime; if he 
wished, as a judge said he did, to “dupe or delude people of money?” 
The Fact and the supposition are too contradictory to bear the con- 
trast for a moment. The thoroughness, promptness, and decision 
that graded up a case, if at all inferior, forbids the idea that any 
illegitimate method was used to get policies ; if the desire existed, 
the easy way was at hand,—grade down applicants and rake in the 
money ; that so many were graded up, that the strong pressure of 
applicants and of agents was not even a temptation, is “proof 
strong as holy writ,” that no temporizing, but that truth, science, 
and the ulterior good of the Company ruled every thought and act 
of Dr. Lambert, and should settle in every thoughtful mind the firm 
and truthful conviction that the accusations made against him have 
no foundation, but are a great mistake, blunder, or wickedness. 
The accusation must have come through “ignorance or false- 
hood.” Those who understand the facts xvill say through both. 
Fact 10.—No officer drew a salary of more than $8,000, nor in 
any way more than $4,500, and that for only a part of the time. 
Remark.—Could these salaries tempt men allowed to be of the 
highest ability, to commit crime ? Cotdd a man thus working to sus- 
tain a scientific principle, to serve the public welfare, after an 
honored life of the strictest integrity, without a blot or accusation, 
be tempted into a crime without any overbearing object ? The 
idea is preposterous. A legal pen remarks : 
“ Dr. Lambert has been said by opponents to be a monomaniac on THE AMEKICAN POPULAR SOLVENT. 
a mode of life insurance. • But do facts show that life 
se was his idol? It was only an instrument for the illustrating, dem- 
onstrating, and developing of Biometry, one of the most profound, 
and, considered in all its relations, practical sciences, ever 
brought to the use of man. Dr. Lambert, as his whole course 
has shown, cared nothing about the monied aspect of the business, 
only as that was a necessity to this. He put in his money, time, la- 
bor, and refused large offers elsewhere with satisfaction, for the love 
of science, of this one particularly. Shall he for this be maligned, 
incarcerated, impoverished, and to till the pockets of interested 
workers against him ? What is still more important, shall the 
public be deprived of his continued services, his researches, his in- 
structions ? Shall such a man be decided to be the only life insur- 
ance President who is to be imprisoned, and 68 whose companies 
have failed, and still worse, those who are yet yearly swindling the 
public out of millions, be at large ? True this is one way to class- 
ify the worthy and the unworthy but should it not he vice versa?" 
Fact. 11.—It has never been charged that a dollar has been misap- 
propriated, embezzled, badly invested, or wrongly used. 
Remark. The “ Receiver” said to a gentleman that he “ could 
find no trace of a dollar stolen ; ” his lawyer told another that 
“ Dr. Lambert had worked hard for eleven years, and he did not 
believe he had made a dollar ; he looked upon him as a mono- 
maniac about a certain way of life insurance.” It would per- 
haps be well for the world if there were more of that kind. 
If these facts are true, and they are unquestionable, how can the 
company be justly called a failure, or its officials be justly ac- 
cused of defrauding any one ? 
Is it possible for the facts under this head (11) alone to be ap- 
preciated and the conclusion not reached that the Company 
must have been solvent; and that the officials, Dr. Lambert es- 
pecially, could not have been guilty of crime or wrong doing. 
Fact 12.—This Company paid every debt ; when enjoined it 
had more undisputable cash assets than would cover claims, just 
or unjust, and all “ reserve ” ever received; able with profit, it 
earnestly wished to fulfill its contracts, and to satisfy it patrons. 
Remark.—How then did it wrong any one ? It did not. The 
wrong was done to, not by, the Company, as will be further 
shown. DR. LAMBERT “NOT GUILTY. ” 
How under tliese Facts just stated could the Company be just- 
ly called commercially insolvent ? It coidd not be, and it will 
soon appear that by the conditions of its policies it was not un- 
sound according to State Insurance Law. Indeed, when en- 
joined, it was practically the soundest in the State, in fact the 
only one having per se a perfect capability of fulfilling its con- 
tracts. We will proceed to the further proof of this by Facts 
and Remarks bearing upon the State Insurance Law relating to 
the Company. 
Fact 13.—In I860 eight companies organized ; in 1876 only this 
one of them was active ; in 1866-68 there were 103 companies ; in 
1876, 43, (now 35). 
Remark. Rightly read this is a volume; vindicating perfectly the 
Company and its officials. The 60 collapsed companies took full 
“reserve” premiums. What right had they to fail ? They misspent, 
or worse, embezzled the “reserve.” This one company, none other, 
in the aggregate took no portion of the “ reserve” part of prem- 
iums,—in fact not one-lialf the money, in proportion to assurance 
made,—that the 60 did, yet was prosperous. For example, if a level 
premium at 35 is $26.38, the “ reserve” is $10.32, and the part ap- 
plicable to cost that year is $16.06. To wit: while the 60 took 
$26.38, this one took less than $16.08, or even half that, for its best 
risks—its chief members. What was its status in 1876, the period 
of its first Decennium ? 
It had not spent a dollar of its capital paid in, for the identical 
capital originally paid in and invested was on hand. 
It did not spend a dime of “ reserve, ” for it never had any 
cash “ reserve” to spend. 
It did not spend even all the cost part of premiums, because, 
first, it did not receive it all. and second, it had on hand a part 
of it as surplus, after paying all the current expenses, and those 
attendant upon establishing business. 
Did any other company in the world ever make such a record; 
ever insure as cheaply as this, the same number of persons, for 
same amounts, for equal times ? Not one. Did any other ever 
insure persons aged 20 to 60, for $60 yearly, for $10,000 assur- 
ance ? Not one. Why then was it not the best managed Com- 
pany in the World ? Doubtless it might have been managed THE AMERICAN POPULAR SOLVENT. 
better, but do not the facts show that none ever was ? Did the 
officials of any other Company ever accomplish so much at so 
little cost ? Was not their faithful industry proved by grading 
risks correctly, and limiting expenses economically ? 
Then since the Company accomplished what it intended far 
more perfectly than it promised or expected to do, it certainly 
was no failure. Is it not a shameless-faced shame to condemn 
this Company in the same manner as one is condemned with its 
capital gone, the full cost part of its premium gone, and a por- 
tion of the “ reserve ” part gone, which surely it had no busi- 
ness to diminish when once taken, since it was a trust ? 
Compare one company, fairly representing the 60, and one, 
the American Popular, making the same number, kind, and 
amount of policies ; starting with the same capital, A receives 
full cash premiums, viz., all the cost and the “reserve ” parts ; 
B receives only half the cost part, and 0 of the “reserve” part. 
The amounts stated below being received, the State examines 
each with the results shown. 
* Company A. 
Company B. 
Cash Rec’d. 
On hand 
when Exam’d. 
On hand 
Cash Rec’d. when Bxam’d 
Capital 
$ 100,000 
0 
$100,000 
$100,000 
Cost part Prem., $1,000,000 
0 
$500,000 
$150,000 
Reserve part “ 
$ 300,000 
$250,000 
0 
0 
Cash Assets, 
$1,400,000 
$250,000 
$600,000 
$250,000 
True, the cash asset is the same, $250,000 in each, and B is 
$50,000 short of $300,000 cash “ reserve,” the same as A, but A 
took from policyholders $1,300,000, B but $500,000. A expended 
$1,100,000, B, $350,000. If the insured get what “reserve” 
there is in A, as they should, they will then be out $1,050,000. 
If the stock in B should get the $250,000, as it should, the in- 
sured will be out but $500,000. 
(It is but just to say that some of the 60 took part note or loan 
premiums, which however in an unsound company could not 
equal “reserve”; some of them also reinsured their policies; 
but as the “reserve” covered those, in all cases the cash cost 
to the insured is in comparison correctly represented for all the 
8 DR. LAMBERT ‘ ‘ NOT GUILTY. ’ 
60 by, at the least, the $1,000,000 in the example, or more than 
twice the cost in the American Popular.) 
Will any person say that each of these companies should be 
equally called a failure ? Are their officials to be equally crimi- 
nated ? A thousand times no ! One deserves the highest eclat. 
Yet it may be said that if the State demands a ‘ ‘reserve” which 
the Company did not have, there was a failure to comply. But— 
Fact 14.—The Company did have the legal “reserve,” (see 
Mr. Barnes’ “ offer to show, ”) necessarily had it. 
Remark. — Conditions in policies provided, at least in a large pro- 
portion of them, that enough of the unpaid premiums might be 
charged to the policies to make the assets 25 per cent, above the 
highest “ reserve ” charged by any State: as also that which was 
chargeable was the difference between the amount taken and the 
full premium, aud as the Company computes at 7 per cent., 
against State computation at 4h the “ gross premiums due, &e.,” 
would alone always exceed all ‘‘reserve” computable by the State. 
Example : A full premium, $310 rebated to $60 cash paid, 
leaves $250, called “gross premium due, etc;” in four years 
$1,000; on 66 policies $66,000, not counting interest. 
Apply the above ideas to B. To its cash assets ($250,000,) add 
(pencilling figures below) “ gross premiums due, etc,” sufficient 
($125,000) to make the whole assets ($75,000) surplus above 
the “reserve” $300,000, or in all $375,000. If any part of the 
cash, assets, $250,000, are unadmitted by any State, or if it com- 
putes a higher reserve than $300,000, then to keep the aggre- 
gate assets up to the same amount ($375,000) as before, the part 
called “gross premiums due, etc.,” must be correspondingly in- 
creased ; this can be done legitimately, since the policies in 
themselves, in virtue of the above conditions, carry the assets 
to more than balance “reserves.” 
(It is unnecessary for soundness according to State law, that 
the aggregate assets exceed the “reserve.”) 
An important point to be remembered is brought out by the 
above example. Through “ignorance or falsehood” changes 
of policies by the company have been most abusively denounced ; 
but the above example shows that the older the policy, not only 
9 THE AMERICAN POPULAR SOLVENT. 
the larger the “ reserve ” but still larger will be the charge 
against it. It was therefore on that account for the advantage 
of policyholders if the matter touched them at all, to have the 
policies changed. 
Mark well here another point, that will convince 
every thoughtful mind that Dr. Lambert could not be guilty as 
accused, since no official would be tempted to exaggerate- cash 
assets, as it would not increase them actually, but it would ac- 
tually diminish the “ gross premium due ” assets chargeable, and 
of course would diminish the actual possible resources of the 
Company. The exaggeration of the cash assets would make no 
more show of assets than if they were put at a lower figure, since 
by the conditions above stated the assets could go up only to a 
certain amount,—and all the assets needed or wanted could be 
had without exaggeration. What then was the motive for exag- 
gerating ? The Judge said, “ to dupe and delude the people out 
of their money. ” But it had no effect nor tendency that way. 
That was evidently a mistake, through misapprehension of the 
facts. As the first count absurdly accused Dr. Lambert of ex- 
aggerating the gross premiums to $66,000, which was far within 
bounds, as we have seen, so as we now see the second and third 
counts, accusing him of exaggerating the cash assets, have no 
foundation in ffict nor intent,—they could not be true. 
How now does Company B (American Popular) compare with 
A (the 60) ? It is evidently impossible by any fair means for 
any State to compute the Company insolvent, or unsound, ac- 
cording to State laws. 
Fact 15.—Its “reserve” remained secure; first, in the pock- 
ets of the insured ; second, in the insured ; third, by the “con- 
ditions ” of policies. 
Remark—“If policies have whole-life level premiums, are not 
cash ‘ reserves ’ in the Company essential to security ? ” 
Owing to the law and to ignorance many think that there is a 
wonderful potency, a magic power in “reserves a fatal fallacy, 
a stupendous stupidity. Witness the scores of failed companies, 
each of which had an abundance of “reserve” at one time, and 
were called sound. “Reserve” indicates that the company is 
10 DR. LAMBERT “NOT GUILTY.’ 
perhaps legally sound to-day, (it may be largely insolvent,) but 
is no indication for the f uture, no, not even in the least, nor is 
any “Examination,” or Statement, or Supervision, such as the 
laws of any State now require ; as proof observe the failures. 
The delusion and snare of the whole thing is conspicuous in 
this, that the law allows that to be sound which conforms to its 
requirements, even though it be commercially or actually insol- 
vent, and sometimes calls that unsound which is actually sol- 
vent,—certainly a farce, proving the law a fiction. To illustrate: 
Suppose A (see example) had taken, as some of the “ 60 ” did, 
$300,000 in premium notes, instead of in cash, and had them as 
its sole assets, (not having expended as much by $50,000 as the 
example now sIkws,) the State LaAv, Examination, Supervision, 
etc., would commend it to the public as sound, though actually 
dollarless and hopelessly insolvent, while B, unqustionably sol- 
vent is denounced as unsound. The measure of cash “reserA’e ” 
essential for security depends upon the expenses and the kind 
of risks in a company ; a matter never even noticed by the laAv ; 
in fact “ reserve ” tending to carelessness in taking risks, is a 
source of insecurity ; why then does not the laAv logically ask 
the use of “reserve,” and, finding it no practical necessity, go to 
work and regulate those things on which the security primarily 
depends ? then—as not one per cent, of the assured in any com- 
pany continues to the age when it is pretended that the “re- 
serve ” Avill be needed,—if the company is Aveli worked, the sur- 
plus vitality and longevity, the viability, of its insured, will nec- 
essarily furnish surplus funds sufficient to cany the business ; if 
the work is not well done, no “l’eserve” ever yet known will suf- 
fice ; that is, companies usually fail before “reserve” is applica- 
ble ; but if so Aveli conducted as to li\Te till it is applicable, their 
risks are so good that “ reserve ” will not be needed. If the 
laAv intends perfect security its true way is, to get rid of all ex- 
cuse for “reserve,” by requiring Companies to insure for as 
many years as desirable, but always by the “pay as you go” 
plan, viz., only pay yearly the cost of each risk classed with 
others like it. This is not only the most secure, but the most 
economical, equitable, and in every way the best plan. 
See plan of Prov. Savings Life Assoc’n. Also Prospectus of Income Ins. Co. 
11 THE AMERICAN POPULAR SOLVENT. 
Fact 16.—The Company had a much larger surplus of assets 
over “ reserve ” than it needed or wanted. 
Remark.—A clear view of this truth and its bearing will dispel 
from the most prejudiced mind the idea that Dr. Lambert could 
be guilty of exaggerating cash assets as he was accused of doing. 
He could have had no motive that way, but might have had in 
the very opposite direction. In fact J. F. Trow testified that he 
had been asked several times to settle up his matters, and get 
them off the books. Now that would reduce the apparent assets ; 
they were too large for taxation, and for the ratio tables. The 
$46,000 stock check assets, about which so much was said, were 
a detriment every way ; they had been reduced, and would have 
been cleared off before, as they were after the “ statement,” if 
they could have been legitimately. Such checks had always 
been counted in the cash account since before Dr. Lambert was 
President,—there was no other place for them. The surplus 
was so large that it is absurd to suppose that it was made so, 
when half of it would have been better. There was no guile, 
no intent, no end to be served, therefore the whole matter must 
have been honorable and honest. 
“ Why were not all these tilings brought out on the trial ? ” 
They were not allowed to be. 
Fact 17.—If Mr. Barnes’ “offers” had been allowed he would 
quickly have shown that there was no case, no false statements ; 
that there were no motives inducing them. 
Remark.—For example, when McCall having stated that there 
were not $66,000 “gross premiums due,” was cross-examined, 
Mr. Barnes quickly made him acknowledge that he knew noth- 
ing about the matter ; that he had not examined the policies of 
the Company, did not know anything about the ‘ ‘ gross prem- 
iums due,” that there might be many more thousands of them, 
and upon reflection he thought probably there were. Thus the 
first count of indictment was set aside, and if Mr. Barnes had 
been alloAved to proceed, he would have proved so clearly that 
the Company was solvent that no jury would have believed that 
Dr. Lambert was guilty, but as the first and third count had 
already gone by tlis board, the prosecution did not dare to let 
Mr. Barnes proceed. 
12 DK. LAMBEBT “ NOT GUILTY. 
“How then were the State officials able to make the Com- 
pany appear to be ‘ deficient’ ?” 
That is the precise point which should arrest the attention of 
every thoughtful mind which reveres justice and loves fair play. 
Fact 18.—The Company never was legally examined, nor was 
the pretended examination made by persons qualified mentally 
or morally. 
Remark.—A terrible arraignment this of public officials, if 
true, if not, it should boomerang the accuser severely. As it re- 
gards the last point, the officials concerned might be left to the 
severe reprehension of Hon. Elizur Wright’s caustic remarks, 
and the truth testified to also by others, in a document herewith, 
which see. These parties had no personal interest to serve, and 
were only asked for the truth in a matter about which there can 
be no dispute ; the truth was a weapon quite powerful enough 
compared with McCall’s testimony herewith, which see, to sus- 
tain the allegation above made. 
But again Dept. McCall on the stand said that he had several 
Term-policies, but would not have a whole-life “reserve” policy. 
Yet nothing condemning one and approving the other, no warn- 
ing, no instruction appears in the Htate Report, no protective 
law against “reserves” is therein, or otherwise, suggested to the 
Legislature. To know that “reserves” are instrumental in 
swindling many millions dollars yearly out of the insured ; that 
Term policies avoid that opportunity, and are the cheapest, 
equitable, secure, and every way best; to use this knowledge 
personally, withholding it from the public, in the interest of 
those who are fleecing the insured, shows a total moral unfitness 
in an official,—a moral incompetence to examine or report upon 
a company. Would any one trust the conscience, the honor, or 
integrity of a man who making no effort, as his official duty es- 
pecially requires, to stay such an immense robbery, but wink- 
ing at it, falls upon a small, every way honorable Company, in- 
volving, all told, little more than a quarter of a million, not one- 
fourtli the stealing of some companies each year, and with vehe- 
ment ostentation condemns it as the greatest of offenders, 
while vigorously praising one in which the sum of insurance THE AMERICAN POPULAR SOLVENT. 
villainies exists ? Will this be thought a conscientious desire to 
perform official duty, or a base liypocricy, calling attention away 
from a wickedness that pays to be concealed ? May not by 
such an official, an honorable company, from which nothing can 
be made, be condemned with the intent of covering the com- 
mendation of a rascally company from which much can be made ? 
But what of the fitness of an Examiner, or the maker of a Re- 
port, who said he “knew no more of life insurance than a 
babe ” ? can he have or express more wisdom about it than the 
aforesaid ? : “ but wisdom proceeds not from the mouths of 
babes and sucklings.” If rich at the expense of wives and chil- 
dren by selling ale and brewers’ grains, is he fit to take a deep 
interest in widows and orphans? If proud to be “the best 
draw-poker player in the State,” winning or losing $1,000 a 
night, is he fitted to burn the midnight oil over prosy insurance 
equities ? If politics be his weakness, do they especially fit 
him to urge insurance economies,—particularly about election 
time ? Do either or all fit him to appreciate scientific insurance 
officials, principles and methods, and without prejudice to ex- 
amine and Report a Company, a special point of which was to 
make low rates to those who do not drink ale, and very high 
rates where gambling and other exciting influences exist, and 
the only one noted for not paying nor donating money illegiti- 
mately ? 
As to legality of examination ; from first to last there was 
no law applied, but the officials arbitrarily took it into their own 
hands, making, adjudicating, and executing what they called 
law, but which had neither the countenance of the statute nor of 
science, nor of morals. The Company was condemned first, by 
discarding some and cutting down other assets, without a shad- 
ow of legal authority, as conceded by Dept. McCall to the cross- 
questioning of Hon. Mr. Barnes, and second, by computing re- 
serves against the old policies equally without authority, and by 
not conceding to the Company the right given by equity not 
only, but by the conditions of its policies, to charge policyholders 
a still greater amount, and thus balance one computation by 
another with a surplus. 
14 OR. LAMBERT ‘‘ NOT GUILTY. 
“ Why was not the foul result of this pretended examination 
resisted,—at least protested against ?” 
Most shameful and disgraceful is the answer. 
Fact 19.—No opportunity was allowed the Company to know 
what the Report would be, to make explanation, to discuss ille- 
gal acts or conclusions, nor to make good any pretended defi- 
ciency. It was a star chamber examination, report, and publi- 
cation. 
Remark.—Dept. McCall testified that the President asked 
him, when leaving the office at the close of the examination “if 
any deficiency was found, to let him know, as they wanted to 
make it good.” This was not true, since the President had no 
idea how it was possible, but he asked “if any thing was not 
understood by Mr. Smyth, to be permitted to explain it.” He 
had been to Albany to explain the modes of business, the Supt. 
was too busy, would see him in New York all the time needed ; 
he came into New York office in “great hurry,” staid not over 15 
minutes, promised to be in again—never was, hence the request. 
Whether McCall’s testimony is true or false, it equally shows the 
intent in regard to not allowing a company to know' about 
“ deficiency.” 
Another fact is of great moment: a Director hearing an ill 
omen from Albany, without consulting with the Company or 
officials, took a large amount of solid securities in his bag and 
went to Albany. The Superintendent told him that the Attor- 
ney General said that Superintendents had made themselves 
liable to indictment by allowing companies to make up defi- 
cency ; that he did not know what the report wras to be, it was 
not done, but if he did, he could not tell him, as it was against 
the law, but seeing he was there, if he would agree not to speak 
of what he heard, especially to any of the Company, the Depu- 
ty should be called in, and read parts of what was ready, and 
answer some questions, so that he would get the information he 
wanted but he must then go out without asking any questions. 
Now it appears that the Report was signed and sent to the 
State Paper that night, before all the facts to close it were in, 
since they were sent to Albany bv that very night’s mail. The 
15 THE AMERICAN POPULAR SOLVENT. 
officials knew nothing of the impending calamity until they 
read it in the morning papers. Evidently this was done to pre- 
vent the Company from having an opportunity to save itself. 
What then shall be said of a Department that shall prevent 
any recuperation, or of any law, if there is one, which prevents 
making good a deficiency, prevents the company from knowing 
first of all that a deficiency is supposed to exist ? 
Effort after effort has been made since to recuperate the Com- 
pany but every effort has been frustrated ; even a new Company 
was set on foot to save policyholders, but its charter was delay- 
ed by the Department so long that that intent was frustrated. 
‘ ‘ But why was not some law provided long ago to avert the 
possibility of the effects of “ ignorance or falsehood ? ” 
That was attempted : in the administration of Gov. Hoffman 
the Legislature passed a Bill nem con., and then it was laid before 
the Governor, who sent the bill (the Legislature had adjourned) 
to the Secretary unsigned. When his attention was called to it 
he was surprised at the manner in which he was deceived,' and 
promptly said that he would correct the error the next winter 
by commending its passage and signing it. But he was not 
elected. The Bill was before the Legislature, and passed the As- 
sembly, but could not be got out of the hands of the Senate 
Committee of which Mr. Tobey was chairman. The ex- 
periment the next year was nearly the same. In the House 
Committee the then acting Supt. was asked his opinion of 
its propriety, and like Supt. Chapman, he expressed him- 
self most strongly in its favor, but the Senate Committee held 
the bill. Last year it was determined that no excuse in regard 
to time should be made for not reporting it, and it was intro- 
duced early. Mr. Tobey then said that the Department did 
not favor it. He was told that there must be a mistake, since 
the Acting Superintendent had approved it. He said he had not 
spoken to him, but to the Deputy, who disapproved of it. This 
let another “cat out the bag,” that is, who the Department was 
in the estimation of Mr. Tobey. 
The methods of the Company have therefore been approved 
by a Legislature, a Governor, and by Superintendents of this 
16 DR. RAMBERT “NOT GUILTY.” 
State, as well as by officials of otlier States. Some officials have 
always taken the graded ages as the basis of computing the “re- 
serve,” or “ value of policies,” in this Company. 
It was only the opposition of the other Companies, who wish- 
ed to swindle immense amounts of “reserve” out of the insured, 
which prevented the legal approbation of correct insurance. 
This opposition has appeared upon all occasions, and in all di- 
rections, consuming a vast expense, scores, even hundreds’of 
thousands on the press and otherwise, and was the inspiration of 
the present incubus on the Company, and of the incarceration of 
its president. 
Fact 20.—In 1876, its hecennium being fulfilled, the Com- 
pany began to redeem its ten year old promises by changing 
and enlarging its early made policies, if the insured were yet 
sound. 
Remark. When the Company started it did not grade its 
risks as low as its judgment suggested, but promised that after 
ten prosperous years it would give new policies enlarged and 
with every advantage its experience would permit. This 
pledge, in 1876, it proceeded to redeem. It offered the choice 
of having a precise copy of old policy except assurance in- 
creased, or the latest edition which had many points favorable, 
and not one unfavorable to the honest insured. 
Ex. If an application was revised and found right, the pol- 
icy should be endorsed incontestible, etc. ; the old policy need 
not be sent until the new one was received and compared, and 
then either could be returned. The kind of policy and its pre- 
mium was the same in each case. 
It does not seem that this honorable action of the Company 
could be made to appear to be a fraud deliberately perpetrated 
to swindle those very policyholders which it was designed to 
profit and to please ; but when the Agents of other companies 
saw presented the strong Facts stated under 13, they read the 
“hand-writing on the wall,” and Fact 20, following, was “the 
straw which broke the camel’s back.” A small meeting was held 
in one city, and a delegation sent to the Home Offices, to repre- 
sent the exigencies of the case and to consult. THE AMERICAN POPULAR SOLVENT. 
A plan Avas concocted. The policy which was increased so 
gratifyingly to policyholders must be the point of attack ; it 
must be made a cause of dissatisfaction against the Company. 
The idea must be disseminated that the policyholders were 
cheated out of their “reserves;” true, they had paid no “ re- 
serves,” had no interest in any “ reserve ; ” no matter, they un- 
derstood nothing about “reserves,” and therein was a means of 
making them believe themselves defrauded. Of course the hand 
of the agents, or of the Companies must not be apparent ; 
unsuspected instrumentalities must be used. They were at 
hand. The agents told the policyholders to write to the Depart- 
ment and find out how they had been swindled on “reserves.” 
The device worked well, making great dissatisraction Avith 
the Company, for when insinuated by letters sent from the De- 
partment to policyholders, of course they began to think and to 
say that the change of policies had been effected by deception. 
The success had by midwinter developed a determination to 
make a bold stroke, put up enough money, and by an expansion 
of the same idea break up the Company entirely. Another 
meeting Avas called, $100,000 subscribed to destroy this and three 
other Companies. (This fact is given upon the statement of a 
person avIio Avas present, and ga\Te names of subscribers and 
amounts.) A ring Avas formed embracing various intents and 
interests, some political, some pecuniary, some, the basis, insur- 
ance, all being served by the breaking up of certain Companies, 
and by their receiverships. Hence, doubtless, why the laAv Avas 
construed as it had never been before, not to permit a company 
to rescue itself or its policyholders. This Company was of 
course the first to suffer, since the Avay to do it Avas at hand, 
being already devised. 
When, therefore, the Company was examined its assets 
were not only most unjustly and illegally cut doAvn, but the in- 
spired complaints of policyholders were made a pretext for set- 
ting aside the neAV, and computing “reserve” upon the old, poli- 
cies, after the Company had computed and sent in its statement 
of its assets on the basis of the neAv policies, thus dropping- 
more than $200,000 of “gross premiums due," etc., assets to 
18 DK. LAMBEKT “NOT GUILTY.” 
which the Company was entitled if the “old policies” were 
taken as a basis of “reserve.” It was next necessary to keep 
up the charge about the change of policies to sustain the idea 
that the Company was not solvent, and had been properly at- 
tacked, hence a referee upon those policies was appointed, and 
a Report made, and notices in the papers, “ Insurance Fraud,” 
etc., and all the paraphernalia carried out of which the public 
has seen so much. 
It is now' quite evident that the whole matter in regard to this 
Company has turned upon the question of “reserve,” and that 
the “ ignorance or falsehood” in regard to it has been the bane 
of its afflictions. The public at large are not expected to under- 
stand it; even lawyers, courts and legislators may be pardoned 
for “ignorance” in regard to it, but for State Insurance officials 
to be in “ignorance” is more criminal than to be guilty of 
“ falsehood ” about it; and surely it is doubly criminal, either 
through “ ignoranee or falsehood,” and especially through both, 
as was doubtless the case in this instance, to condemn a solvent 
Company and accuse its honorable officials. 
The fact is, that nothing Avas ever done more fair or more 
honorable than the treatment of its policyholders by this Com- 
pany, particularly in the matter of this change of policies ; to 
eATery policyholder it was a gain, and to the Company a loss, ex- 
cept as increased satisfaction to the policyholders, and an in- 
creased acquaintance Avith them Avas a gain, Avliich Avas esteemed 
quite sufficient. 
19