The sun. [volume] (New York [N.Y.]) 1833-1916, 1905-09-08

name he didn't care to mention, had taken
Sl'VO,OO0 OF the bonds, and that he sent
down and took HIS allotment from them.
Mr.. Cromwell added
4 told two or three members OF the
finance committee that they were good
bonds TO buy
Q. That was an underwriting syndicate.
was II notY A. oh, yes,
=. understand you participated In thatp
A. Through that banking house.
o..The banking house participated In the
syndicate and you took some OF the bonds
from the banking house. A. Yes.
Q. What was that banking house7 A.
Strong. Stursis 4 Co.
q. Did other members Of the finance COM
mittee do likewisep A. / am very sure they
did.
q. Who are they that you have In mind?
A. Well that 10 rather telling their private
business. but l told Mr.. McCurdy he had better
buy some and told MIR. Haven and Mr.. Jullliard.
Q. Through the same banking house in
the same way? A. In the same way.
q. Not subscribing to the syndicate in the
nrst instance? A. No.
Mr.. Cromwell denied that the banking
house had taken Its allotment in the sub
scription with the understanding that these
Mutual trustees would take part of the
bonds. the witness said his subscription
was for fifty Of the bonds and that the syn
dictate agreement for the company was in
writing. Counsel for the committee asked
him to produce 1t at the hearing to-day
co., sYNpIcATEs DEFiNED.
Mr. Hughes asked the witness to explain
Just what his idea OF a syndicate was. Syn
dictates, he said, are organized by bankers
W bn "a "a
investors TO come in and take portion Of
the underwriting The bankers and trust
companies, he said, find they can buy any
certain bonds at lower price II they take
them In large blocks The syndicate agree
ment merely places the matter in the hands
OF one or two concerns, limits the time
and method Of selling and also controls
the security. It enables the buyer to pay
q fair price because there is no danger
that the security will be thrown promiscu-
ously upon the market. 1t makes the
large purchaser the controller of the Sc
curities.
Tho intention IL that the syndicate mana
gers shall sell large proportion of the
issue by making public offering The
difference between what the syndicate
managers have to pay for the securities
in block and what they realize on the public
sale, the witness said, determines the profit.
He admitted that il there is a syndicate
back Of this syndicate management it
shares in this profit The Mutual's treasurer
said that the company often would prefer
to withdraw the bonds which 1t had UNDER
written, on account Of the desirable char
sc.er Of the Investment and not offer them
to the public. but the bankers wouldn't
allow them to do this. because they desired
TO make market for the security.
Q. SO that ordinarily 1t is contemplated
that the parties who enter the syndicate will
be responsible for certain proportion OF
their allotment OF the securities In case the
public do not take them. but the intention is
that II the public will take them. they shall be
Sold A.. Yes. but with us. II We do not with
draH than. In . vast majority Of cases we buy
@. That 10. you take your place In the
market. A. Yes.
@. understand then that when you enter
into Q syndicate II 10 not regarded as quite in
good form that you should withdraw your
syndicate allotment for investment. A. No.
Q. They want to mako the money on
resale Of the allotment that IL distributable
among the members Of the syndicate ac-
cording to their respective par6cipations?
A. d
@. Now. when the syndicate management
sells to the public You get In and buy. SO that
you occupy In the transaction two different
capacities-hrst as members Of the syndicate
you underwrite the issue. and agyee in any
event to take certain amount atSthe original
syndicate price, and also you come In later
a. part OF the public and take portion of
the investment from the syndicate managers
after the public offer is made? A. Yes.
As a rule Mr.. Cromwell said the Mutual
tried to withdraw good securities, but they
have hard work in succeeding. Some
bonds they don't want to withdraw for the
reason that they have enough securities
Of that class.
I'VE have" said the witness, $50 many
millions that we endeavor to spread them
over a. many desirable purchases as possible
and not get too many OF one kind Of bonds
The witness stated that the Mutual had
not In the last two years had a single bond
In its S24s. 900. 900 OF securities in default
SUBSIDIARY COMPANIES ADVANTAGEOUS.
Mr.. Cromwell said that one Of the COM
trust companies was that they served as a
channel for the investment of the Mutuars
money. As treasurer Of the company, he
was not, no tAlu, IN poeitioh W soiiGit
business, but 1t is the business OF trust
companies to look for investments.
THAT Is your business, too said Mr..
Hughes.
sNo, sir" replied the witness, they come
to US; we never solicit"
Counsel for the committee wanted to
know again whether 1t really wasn't the
business Of the officers to have the COM
pany's funds invested.
.Yes, SIR replied the witness. but it
IL Is q great advantage to have large trust
companies seeking investments for us
The trust companies assist, he said in
getting UP the syndicates; that is one Of
their chief functions.
Returning to the particpations in UNDER
writing syndicatee by individual trustees
OF the Mutual, Mr.. Hughes wanted to know
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