The semi-weekly messenger. [volume] (Wilmington, N.C.) 1897-1908, 1905-09-15

New York, September ia V1SOr-
Gus defense of syndicates and their OPP
eratiOns in connection with the insur-
of personal profits gained through their
operations, made by Frederic Crom-
we'll treasurer of the Mutual Life In
surance Company, was the feature of
tOday's session of the special legisla-
tive committee appointed to PROBE
methods of life insurance companies In
this state. The defense of the syndi-
cate was made by Mr.. Cromwell soon
after he was called to the stand in the
morning. Before he was asked
question he begged leave to say few
words and upon being directed to pro-
ceed said:
The law of combination which eff
fects finance as everything else has
made syndicates necessary. When [
became treasurer of the Mutual Life
Insurance Company the total assets Of
our company were $1OO,OOO,OOO. The
$100,0OG,0OO per year. When our re-
ceipts were less, twenty years ago, it
was quite possible for us to buy from
bond dealers and pay the successive
profits, but now it is absolutely impos-
sible to buy advantageously large
blocks of securities, except as they are
fOated by combinations Of capital.
popularity called syndicates, and wa
have to go into them to get out invest
ments and get them iii sufficient size
and at ground floor prices. We could
not make our investments without
syndicate and we are partners in every
syndicate which we go into. | want
to say further that unless we went
into these syndicates we would not be
able to invest our funds, except by
buying in small quantities and the sue
ceSSive profits Of middemen.
Il ask you, Mr.. Hughes and the
committee, to consider that we have
now over $450,0OO,OOO of bonds, and
while we have over $1OO,OOO,OOO in
vested in bonds and mortgages, we are
constantly under the necessity Of find
ing additional investments for our
large accumulatiOnS of funds. We
could not make transactions of one
hundred millions a year in the securi-
ties bought by this company without
using syndicates."
The acknowledgement of personal
profits was made in a tabulated state
ment which was presented to the COM
mittee after recess. 1t showed that
Mr. Cromwell had made personal
profit of $26,3I1 from syndicate opera
tOns during the past five years, IN
which he individually and the Mutual
Life Insurance Company had partlcl-
pated.
Mr.. Hughes, chief counsel to the
committee, Immediately took up each
item of these syndicate transactions in
an effort to ascertain the manner in
which these profits were obtained.
An interesting point was brought out
when probing Il transaction in Penn
sylvania railroad 12 convertibles in
which Mr.. Cromwell made no personal
profit, the witness stated ''Of course
we are greatly interested in the Penn
sylvania railroad. ! might say we are
the heaviest stockholders"
Answering Mr.. Hughes Mr.. Crom-
well said the holding of the Mutual
Life in the Pennsylvania railroad was
So.UOO,UOO par. Among CnOSe CranSdc-
tons the connection of trust companies
with the Mutual Life was brought out,
when it was stated that the 100000
pounds sterling subscription TO jap
anese loan was shared by the United
States, Mortgage and Trust Company
and the Guarantee Trust Company.
In explaining this relation Mr.. Crom-
we'll said:
I'VE gave the opportunities to the
trust companies in which we held large
interests for good reasons. AS l ex-
planned this morning we, as an insur-
,,anc company, need very large banking
facilities for very large interests.
1T goes without saying it is better
for US to use our own companies, rath-
er than give to institutions with which
we have 10 connection, the handling of
our large investments. For this rea-
W. int tho 6irQcfarafc nf