Omaha daily bee., 1905-09-15
PROBING The METROPOLITAN
Director Butcher Says that Company Buys
Securities Largely fFen BrOksrh
CROMWELL ON SYNDICATE OPERATIONS
Treasurer of Mutual Life says His
Company Made LSrse PrOhts
from These Transnc-
tions,

legislative committee probing life insurance
companies methods adjourned today Chief
Counsel Hughes had finished for the pres
ent the examination into the Mutual Life
! Insurance company and the Metropolitan
| Life Insurance company was started on
when silas b. butcher, a director and
member OF the finance committee, was
called to the stand.
Mr. butcher was questioned regarding the
insurance held BY the Metropolitan and as
to the syndicate operations Of his company.
He was asked the salaries Of the companys
| officers, but could not remainder them. He
will present the list OF the officers salaries
to the committee tomorrow. Mr.. butcher
| was still on the stand when the committee
adjourned.
Mutuaps Big PrOats.
| Earlier In the day Treasurer Cromwell
| had taken the stand to complete his ex-
plantations OF the Mutual Idfe's syndicate
| operations In explaining the relations of
the Mutual with the trust companies Mir.
| Cromwell stated the interesting fact that
on the purchase of tl,12O.OOO worttrpf shares
Of the Guarantee Title and Trust company
| the Mutual had received In diyidepds
| 81 220 600, making these shares cost nothing
| and realizing a profit
MI Cromwell stated these shares were
now selling at over COO.
On the advantage of dealing through
| Byndieates in preference to buying railroad
bonds direct Mr.. Cromwell said he had
actually tried to buy bonds directly from a
railroad company. He went to his friend
! stuyvesant Fish, president of the Illinois
Central, and Mr.. Fish told him he could not
AFFORD to sell the bonds to the Mutual
In his testimony after the recess explain
ing a matter OF a purchase of Bank Of
| California stock Mr.. Cromwell said the
| issue p5ice of the stock was $50. Mr.. Crom-
| well hoped to get the shares at this figure
| but In the end the share holders to whom,
under the California law the rights to the
new Issue belonged. held out and the
| Mutual obtained its 5000 shares at an av-
eTage price of $50 $40 The sale was en-
| tlrely by individuals and there was no
syndicate. The transaction was left en-
tirely to William Babcock with absolute
confidence that he was dealing fairly with
| the Mutual.
Mr. Cromwell was asked whether he in
creased or decreased his holdings in the de-
bentures Of the United States Mortgage and
| Trust company to assist the trust COM
pany. He replied; mot entirely so. It is
partly to help our whole western clientele
to knew that through one of our companies
they can get money on bond and mort
gage"
The advertising, printing, stationery and
| postage accounts of the Mutual is sl,134-
20; OF the New York Life 1t is 1851 ,2SL6s;
| for the Equitable, S772,645,50.
How are advances made to agents by the
MutualP"
ut is done through the general agents OF
the department, but l understand the
amounts are not large"
You have an account with the American
Exchange bank2"
I'VE have had 1t for nearly a generation"
| You do not receive any INTEREST,""
"None whatever. Its president is one OF
our trustees and he tells us frankly II we
want interest we must go elsewhere. but
We have not thought It gracious to close
our account"
Investments of Metropolitan.
1t was at this point that Mr.. butcher was
| called.
| The list OF stock and securities held by
the Metropolitan on January |. 1905, was
marked for Identification. also the lists OF
purchases and sales Of securities and syn
dicate partIoipations in the last ten years
were produced and in evidence.
OF $4,000, 600 Of the securities held by the
Metropolitan about SOS, 100000 were puF-
chased from Vermilye & Co. and w. A.
Reid & Co.
Mr.. butcher said the president usually
did the purchasing Of securities for the
/ Metropolitan.
1t appeared from the questioning that the
president of the Metropolitan had sole dis
erection in which banks and trust companies
deposits should be kept.
When the Insurance investigation was
opened today the first witness was Fred
erick Cromwell, treasurer of the Mutual
! Life Insurance company, who continued his
explanations OF syndicate operations in
which the Mutual Life participates.
Balances of from 100000 to $1,000, Gao
maintained In the National Bank of Com
meroe OF New York In 1904 were explained
| by Mr.. Cromwell who said the reason for
keeping such large sums at that bank was
that the bank paid the company per cent
| interest, while the insurance company could
not have loaned the money on call at that
rate. The Mutual Life, being a large stock
holder In the bank, he said, was naturally
| favorably disposed toward maintaining a
! large balance there. especially when the
money was not needed, Mr. Cromwell,
| questioned further on the subject. said that
| later, when the market rate for money on
call was 81 per cent, the Mutual Life In
surance company's deposit was still kept in
the National Bank OF Commerce at per
cent.
The relations Of the Mutual Life Insur-
| ance company with trust companies were
touched on again today, and while on this
matter Mr.. Cromwell detailed the conRec-
| ton OF his company with the Title Guar
anty Trust company. we thought this
company a paying investment at the time,"
said he $50 we took 81, 10000 of its shares.
On this we have drawn t,R0,oo. These
shares, therefore, cost US less than nothing,
They are now selling at over 900 CpaF value
N0el. We now hold $4,000 Of this stock at
par, We keep 10000 on deposit there"
Inyeatments Have Paid.
Mr.. Cromwell said that as the company
only Invested in hrst-class securities II
could net get the highest rate Of interest.
1t had only s OOO0O0 in foreelosed property
whereas It had acquired property now
worth |Sa.OA800O At cest OF tls,OOo,OoO The
large profit thus earned through rise In
values more than made up fer any apPaT-
ent loss through low interest.
Mr.. Hughes elected from the witness that
the Mutual Life received slh per cent in-
terest on debentuFes taken from the United
stayes Mortgage and Trust company.
though the latter loaned money on mort
cages al per cent. The difference went to
the trust company.
Mr.. Cromwell was excused with a re-
Guest 20 prepare a statement showing how
ro,.,h rnara the Mutual Life would have