The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1895-01-30
NEUTRALITY-SUSPICIOUS.



guardians Of trust funds.
A decade of "good times" during
which railroads, manufacturing COM
panies, and business corporations OF all
kinds find it easy to show large earnings,
tends toward extension oil Liabilities, IN
crease of fixed charges, ana oVer-eapltal-
ization; in such periods of general pros
nerity investors become credulous ana
hold. and the most conservative man
ayers of capital make investments which
give them o shocking opinion of their
own Judgment as they look back at their
record from the standpoint of the fnan-
cial crisis which is sure to follow an I'M
warrantable initiation of values.
In times of financial and commercial
depression securities which are fairly
good, and reasonably well protected,
Share the fate of the poorer class, and at
such times they are marked down below
their intrinsic value By the quotations
made at the various stock exchanges OF
the country.
Union Mutual Life Insurance Company
at the close of December 1893, would
compare favorably with the holdings OF
most other financial institutions at that
time, its list included several lots of rail
road bonds which did not seem so at
tractive when in default of interest, with
the property securing them in Receiy-
er's hands, as they did. the year they'Were
acquired, when at that time these same
railroads were earning operating ex-
penses, fixed charges, and dividends upon
latheir stock. and were energetlcally eX-
! tending their mileage to meet the anu
Icipated demands which expected develop
ment of new territory would soon renoer
necessary, believing that this additional
mileage would in the near future greatly
increase the earnings, thus placing the
property upon permanent and substan-
Etini basis to enable the corporation TO
meet all outstanding obligations and
| liza bilitles.
Tue plans and expectations OF the man
| ayers of these railroads did not at the
time seem unreasonable, and bonds were
readily taken in exchange for the neces-
sary capital to complete construction.
| Neither the managers of such railroads
! nor the managers of the financial insti-
buttons which purchased their securities,
| could foresee the approaching financial
| crisis. All realize now that its visit has
been made, and many are still buslly
engaged in strengthening the weak
| points in their financial structure winch
the panic developed.
| If the effect of the business depression
has been to reduce the cost of railroad
construction, it follows that roads which
were built previous to 1898 may have
| legitimately beer over-capitalized as
measured by the basis of cost today,
and it is no reflection upon the saRacity
or Judgment OF the 4ranagement1oi man
/ cial instituGionssthat they now find IN
their assets rai1roadsbonds issued in ex-
! cess of the amount necessary reconstruct
! the road upon the basis OF cost OF con-
struction at the present time.
1 While the shrinkage in market value
! of the 81, $50, 600, railroad bonds owned
by this Company was Sl0o,s'S7. 40, as
4 RI Bdas, ,11b or
1893, the Polioy-h elders of the Union
Mutual Life Insurance Company have
the satisfaction offknowing tbatit would
1 be difficult task to find holder OF a
similar amount of railroad securities
4 whose shrinkage in market value was
less, and it may be qualification to
them to receive the assurance that
through the many changes which nave
been made by the Finance Committee
of their Board in the Assets of the Conf
many. at the close of 1894 it did not own
4 A SINGLE BOND OF ANY KIND
4 WHICH AT THAT DATE WAS IN DE
4 FAULT OF INTEREST. and the loss
/ in value below cost of $500, 387. 40 made
4 in 1898 had disappeared. and at the close
of 1894 the value Of the quick Assets was
1 S69,118.05 above their cost.
/ Explaining some of the changes re-
ferred to which have during the year
been made in the A ssets of the Company,
/ there has been sold $3.50, 900 par value, of
i railroad bonds Qncluding $500, 00o par
! value, which are now in default OF inter
! est payments,) and sale has also been
1 made of 5000 par value OF mlscellane-
4 GUS corporation bonds.
! While there are exceptional Instances,
| it is substantially true that the financial
/ institutions which have Invested their
money in the choicest securities during
the past ten years, or twenty years, have
during that period experienced the great
est degree of, prosperity, earned the
| largest profits, maintained the highest
credit, and have always beenathe best
prepared to meet the emergency of u
/ financial crisis 200
| Firmly believing in the wisdom of this
4 policy, the Finance Committee OF your
Board have endeavored to dispose OF all
securities which seemed to possess in
4 some degree the speculative element, and
I sd bstituts in their stead sound invest
ment securities less bject to wide fiuc-
Mutations in market value. Recognizing
d2that while Ii is desirable to hold a reas-
Eonable proportion ofsyour Assets in bonds
which may be readily converted into
cash at any time, the element OF CONVEX
ltibility is not SO essential in the Assets
of a Life Insurance Company as it is in
the Assets of a Savings Bank whose de-
posits are liable to be Withdrawn at the
pleasure OF the depositors.
In making Investments your Finance
COMMITTEE have first considered the ques-
tion of safety, and next the question of
income; and the following comparative
statement will show the different classes
of securities in the Assets of the Com
many which have beer affected by the
4 changes made during the year 1884,
Dec, 80, Dec. 81,
1898. 1894.
Railroad bonds, 81, 1851, All. 40 $1,C24 ,S55.oS
Hunted States
| bonds. None 29,376.0O
't and City bonds, 947.59s5o 1.os4, AIT. 21
Miscellaneous ~
/ Corp'n bonds, 642,o52.96 75o,2l4.o 81
fng po .sasTT2 +ata - e1O o5e 90 3S2. 25S. SS