The Morris County chronicle. [volume] (Morristown, N.J.) 1877-1915, 1902-11-21

was sagacious enough to have sub
scrlbed for a hundred shares OF the
Fidelity Insurance Company at par.
This also would have cost him ten
thousand dollars. If now, owing to
any circumstances which are un-
necessary to particularize, the stock
Of the Fidelity Insurance Company
can be disposed of for $3.50 share,
our doubly fortunate investor has
added to the inventory of his assets
the sum of seventy-tive thousand
dollars or sixty five thousand dol
lars and his original stock. The
net profit of both transactions would
stand then about as follows: Selling
value of one hundred shares of Pru-
Dental stock sixty thousand dol
lars selling value of Fidelity stock
seventy five thousand dollars; total
one hundred and thirty-five thous-
and dollars; original stock twenty
thousand dollars; balance, net cash
to the good one hundred and fifty
thousand dollars, without the original
investment.
1t is true that in order to carry
the merger plan into effect the stock
of the Fidelity Insurance Company
is to be increased and sold to the
purchaser at the price of $3.50, but
that purchaser is the Prudential Com
pany, and the price at which the
new stock is sold necessarily fixes
the value of the new stock at the
same rate. But beyond this it is
fair to presume that the same degree
of sagacity and intelligence, which
was shown by our original investor
in the stock of each of these two
companies, would, in the natural
course of things, and with the PIE
science perhaps, of some such COM
bination in the future, lead him from
time to time to pick up, and to carry
as many of the shares of each of
these companies as his means would
permit, or as he could use as the
basis for loans from banks to enable
him to carry them. Both of these
stocks have justly had the conf
dence of bank managers not only in
New Jersey, but in New York as
we'll, and have proved an acceptable
collateral for loans up to the usual
limit, eighty per cent Of the market
value at the time Of the loans. 10
what an extent this process may or
may not have been carried by the
common managers Of the Prudential
and of the Fidelity no one of course
can tell, and there is no means OF
ascertaining, except by an examination
Of the transfer books of each cor
poration. But the plan Of the merger
itself is undoubtedly ingenious and
shows financial acumen of high
order. 1t is scarcely to be surpassed
by that Of the two tramps upon a
western prairie, who each acquired
an independent fortune by the simple
process OF mutually swapping
jackets.
The insurance commissioner of
Massachusetts entertains some dole
full forebodlngs in respect to the
possibly injurious effect this tran
saction may have upon the policy
holders of the Prudential. We think
that he undertakes and possibly
forgets the drastic and unlimited
powers conferred upon him by the
legislature of his own state. and
also conferred by the legislature
of nearly every state in the Union
upon the insurance commissioners
or superintendent of such states.
The moment there is any appearance
of wrong doing upon the part of the
managers of any of the insurance
companies brought to the attention
of any one of such commissioners,
his powers of investigation are
ample, and he is not only justified
but required to exclude any corpor-
alton whose managers exhibit culpa-
bility, from transacting business in
his own state.
Moreover we have the criminal law
to invoke in case of need and in
corruptible courts and juries to en-
force it and we are happy to say
thai on this side of the Hudson River,
at least the old jingle is true. =
He who prigs wot isn't his'n
If he's cotched must go to PRISON.
There have been many such cases
in this country where weak or badly
managed insurance companies have
been practically forced to suspend
business, and one noticeable case in
particular in which the Mutual Re-
serve Life Insurance Company was
forced by the adverse attitude of the
insurance commissioners of different
states to change its plan of business,
and reorganize upon different basis.
In this respect the fears of the Mass
achusetts Commissioner appear to be
groundless, or at all events pre-
mature, and we can see no peril
to the interests of the policy holders
of the Prudential. 1t is undoubte lily
a sound and solvent company, and