The sun., 1905-09-14

other large companies 70 roll up new pusI-
Iess, to increase the surplus and 10 get
INTO these syndicate operations you are
to find an opportunity to invest the iunos
that you have accumu lated
The witness said that, was his idea g! OK
cept that the Mutual had no surplus, we we
call IT," said MIR. Cromwell, "a contin gent
liability which belongs to the policyholasrs.
which must no to all the pol licyholders
and which is held only for their benefit
THE DEAL IN CUBAN BONDS.
Counsel for the committee took up first
the Mutuals participat ion IN the Cuban
bond syndicates he showed that SPeyer
in the hrst instance at 80. The total issue
was for $35 ,OOO, 900. Ihe Mutual Life was
hAhind Speyer d Co. in this purchase to the
ext ent Vi IS, ,OUO,OOO, but instead OF Withdraw
ing any Of the bonds on that underwriting
the Mutual entered second syndicate.
which acquired $4,000 600 Of the bonds at
Oi with an option on the remaining & SIS 700 900
worth at 82la. The mutual, II was said.
understood when it went into the original
syndicate that 1t was not expected TO with
draw any OF the bonds which 1t had UNDER
written.
On the 100000 900 syndicate the Mutual
took 81 500 OOO Of the bonds at 91 and on the
subsequent syndicate organized to handle
the remaining $l5,0OO,ooO it took Sl,60O OOO
of the 81 ,S75 100 to which 1t was entitled:
The secu rites were taken by the Mutual
subject to the syndicate call. The remain
ing 3375, 900 was left In the hands OF the
syndicate managers to be disposed OF by
them. Tho Mutual made considerable
profit on the underwritings and sold 5000
LUo Of the securities at net profit OF SioS ,0Oo.
Mr.. Cromwell testified that he took his
JarticiI alton in the original syndicate
through the banking firm OF Strong, Sturgis
* Co., of which concern his son is MEM
her. Mr. Cromwell said he advised sew
eral persons to take the bonds as he was
sure they were safe invest ment. he
ead that the bonds which he had under
written were not withdrawn by him.
1t was when Mr.. Hughes requested the
Mutual Is treasurer to present MS state
ment showing his participation in syndicate
transactions with tho Mutual that Mr.:
Cromwell said he resented being called
10, 60 through his private books to bring
these things out.
You have said Mr.: Hughes, .ilvited aiS
ne to bring this all out in the fullest detail,
and you ought not to resent what is being
done on your own invitation. feel 1t my
duty to go into these matters.
MIR. Cromwell said then, as he had eaid
few minutes before, that he was glad
TO do anything in his power to aid the COM
mittee.
PROFIT IN Pennsylvania.
Mr.. Hughes took up the Pennsylvania
az convertible bond syndicate, In which
Mr.. Cromwell had participated to the extent
Of 5000 and from which he had not yet
derived profit because the bonds have not
urer testified. was recent transaction.
The Mutual had S. 900 900 participation
in that syndicate, which was taken out June
~, 1908, 50, 600, 600 through J.. P. Morgan 4
Co and 81 900 600 through Kuhn, Loeb 4
transaction Of sss $40 ST. The Mutual &C,
quired 34.5e9. 800 Of the bonds. Counsel
for the investigating committee wanted to
know whether they had been withdrawn
from the syndicate on the underwriting
a public Offering. The. witness said he
understood that instead Of withdra wing
the bonds for investment the Mutual was
called on for money and that the bonds
are held by the Mutual subject to the syndi-
Gates ca until the syndicate Is closed.
"In other words, said counsel for the COM
mittee, .you put up. the money
The witness said that the reason why the
Mutual had taken the bonds in this way
was because the company is large stock
Mutual's holdings in that corporation. the
witness thought. we're about Is 600 900.
O. But the Mutual took none Of those
bonds, when the Pennsylvsnia Railroad
offered them direct to the stockholders,
q. Why didn't the Mutual take them thsn'
a. Because the company was such large
time that'it did not care to increase Its hold
ings.
The Mutual, Mr.. Hughes said, would have
been entitled as 'stockholder In the Penn
sylvania Railroad to cake 81 $50 900 Of those
bonds at par, and he asked again why the
company had not availed itself Of that OPP
portunity. The witness replied again that
the Mutual did not want any further In
vestment in Pennsylvania at that time.
to the fact that the Mutual later stood as the
owner of 81 900 COO OF the bonds, and the
witness said that the company had die-
posed Of % 900 900 OF them and had made
311 per cent. on its money.
HELPED OUT THE SYNDICATE.
Counsel for the. committee wanted to
know II the reason for the investment wasn't
that the Mutual wanted to aid the opera
,ions OF the syndicate which was formed
to handle the bonds. and Mr.. Cromwell
said he thought it was;
took none OF the bonds "a stockholder.
He thought, he said, that he could get them
cheaper through the syndicate.
In the case OF the Southern Pacific first
rsiundsng " in rhCh y NJ, .S comwe no ,h Vas In
underwrote d 800 600 Of the bonds. The
Mutual owns IS 900 900 Of these bonds, which
1t bought at 96%.
Q, Did the Mutual Life withdraw 81. SOC. 900
Oh shs on did i enfe
OF the bonds at the public Offering! A. We
boug ght the 81. 900 Of bonds from Kuhn,
Loeb 4 Co., the syndicate managers.
Mr.. Hughes called the witnesses attention
to the fact that the Mutual entered into it's !
syndicate participation in Southern Pacific |
on February 8, 1905, and that the purchase !
OF the So, 900, 900 Of the bonds, according
to the minutes Of the meetings OF the finance !
committee, was authorized on the same |
day and actually made two days later.
"The purport Of the minutes said counsel |
for the committee, ~is that the Mutual Life |
participated to the extent OF 81, 900, 900 at |
8sH In the underwriting with the under |
standing that 1t would buy t3, 900, 900 Of tho |
bonds at the public Offering at o. less 4 COM
mission"
MUTUAL GOT A PROFIT.
The profit which the company received |
on its underwriting was 81, ,2o5. The wit |
ness admitted that the Mutual BY buying |
the bonds at the public Offering had con-
tributed to the profit which the syndicate |
managers distributed among the partici- !
wants in the underwriting.
In.the case Of the United States Of Mexico |
bonds, to which syndicate Mr.. Cromwell |
subscribed to the extent Of 500 900, making
a profit OF more than 33 3.0CO, the Mutual |
underwrote a 800 900 Of the bonds. Speyer
4 Co., Of which firm James Speyef Mutual |
trustee is a member, were the managers |
th0 honda nj 20 md rho M,,t,,oI 90. a., -.