The sun., 1905-09-15
had TO BUY FROM SYNDICATES
INSURANCE OFFICIALS SAY THEY
COULDN'T DEAL FIRST HAND.
Tue Bankers Control the Market, bat Let
the Companies In on Essy Terms-Tne
Mutual Also Got Mortgages Second
Hand-Content with small PrOilts.


Mutual Also Got Mortgages second
Hand-Content with small Profits.
The Armstrong insurance committee
at It's hearing yesterday continued its
inquiry into the big life insurance COM
panies' participations In syndicate trans
actions. Counsel for the committee sought
to disclose not only the methods employed
by the companies in these syndicate ope-
rations, but also, and more particularlyi
the causes which prompt the companies
to purchase their securities in this way
through bankers instead Of going direct
to the vendors.
Besides Frederic Cromwell, treasurer OF
the Mutual Life, who testified on Wednes-
day, James N. Jarvie Of Arbuckle Bros.i
Charles r. Henderson Of Henderson Bros;
F. Baker, president of the First National
Bank. all trustees Of the Mutual Life. were
called to the stand to give their opinions
and state what their relations had been
to underwriting syndicates in which the
Mutual had participated. Silas B. Dutcherj
president Of the Hamilton Trust Company
and a trustee Of the Metropolitan Life, also
testified.
GOT IN CHEAPER THROUGH SYNDICATE.
All the witnesses upheld syndicate trans
actions on the ground that they afforded
an opportunity for getting the securities
cheaper than Is possible under present con.
ditions in any other way.
Mr.. butcher is one Of the three members
OF the Metropoiitan's finance committee.
but he was able to answer only very small
percentage OF the questions which Mr..
Hughes asked in regard to syndicate trans
actions. The Metropolitan's finance COM
mittee meets regularly, it was shown, four
times ye; r, and at those meetings the in.
vestments and sales, as well as the syndi-
cate participations carried through by
President Hegeman in the three months
interim between the meetings. are approved.
The Metropolitan's president, however.
frequently consults, it was seid. with the
members Of the finance committee individu-
ally, although no record Of approval or
disapproval is kept until the quarterly
meeting. 1t was stated that OF the 81 .O00,-
600, book value, of securities owned by the
Metropolitan Life about S8O,0OO,OOO were
purchased from or through two firms.
Vermilye Il Co. and William A. Read Il Co.
Mr.. Read it was said was a member OF the
firm Of vermilye 4 Co. up to January last.
The fact was disclosed that the Metropolitan
has frequently purchased securities from
these firms without having availed itself
Of opportunities to withdraw the securities
on it's underwriting participations.
It was shown further that the Metropolitan
in some instances received q profit upon
its syndicate participations when it had
withdrawn the securities to which 1t was
entitled under the syndicate agreement.
Mr.. butcher was unable to explain this
matter and counsel for the committee
asked that preparation be made to elucidate
the profit entries at a future hearing OF
the committee.
ALL INTERESTED IN sYNDICATEs.
Mr.. Jarvie and MIR. Henderson admitted
that they had participated as members OF
their firms in syndicates in which the Mutual
had been Interested. MIR. Baker said that
he had been interested in syndicates through
the First National Bank in which the Mutual
was also interested, and Mr.. butcher adj
mitted that he had taken an individual
participation in a syndicate in which the
Metropolitan was member.
All the Mutual trustees maintained. as
did Treasurer Cromwell on Wednesday,
that their decision to participate in the
syndicates was arrived at without regard
to any knowledge which they had as trustees
OF the Mutual, and Mr. butcher declared
also that his judgment was not affected
in the least by the fact that the Metropoli-
tan was in the syndicate in which he took
an underwriting.
MUTUAL AND BANK OF COMMERCE..
Mr.. Hughes took up With Treasurer Crom-
we'll the matter of the Mutual's cash de-
posit in the National Bank of Commerce.,
in which ir stitution the Mutual Life is .
heavy shareholder. The witness testified
that from January until June Of the present
year the Mutual had maintained cash
balance in the hank averaging about
S7,0OO, 900.
In 1904 the cash balance was as high
as $4,000. 900 at one time. The hank pays
the insurance company per cent. on the
deposit. Mr.. Cromwell explained that
this account in the Bank Of Commerce was
the Mutual Lifes largest account; that the
company made its general deposits there
and that the bank made many collections
for the Mutual. He explained the fiuctua-
tions in the cash balances from month TO
month by saying that the deposits were
increased frequently in anticipation Of
large payments.
Mr.. Hughes called the witness's attention
to the fact that the balance stood at 50 600 600
or above for period of eighteen months
and suggested that the additional deposits
obviously weren't made in anticipation
of large payments when the balance was
already over s6,OO0,O0G
The witness said that the Mutual carried
large deposits with the National Bank Of
Commerce because the company desired to
have it's funds in an institution over which
they had control, both as a matter of Sc
curity and convenience. Mr.. Cromwell
denied that 1t was chiefly to allow the stock
holders in the bank, tho Mutual Life
included. to make money out Of the insur-
ance company's funds that they we're do
posted In the bank in such large amount.
CONTENT WITH SMALL PROFITS.
Mr.. Hughes called the witnesses attention
to the fact that the Mutual Life is quoted.
in relation to other companies, as being
forty-first on the list in respect to the rate
Of interest which 1t makes ON its admitted
assets. This rate is AIT per cent. Counsel
for the committee wanted to know II Mr..