Los Angeles herald., 1905-09-14
TALKS IN BEHALF
OF SYNO|CATES
TREASURER OF THE MUTUAL
LIFE ON THE STAND
DECLARES THEM NECESSARY
Claims That Only Through These
Combinations Can the Big COM
panies Secure Investments at
Advantageous Prices
BY Associated Press.

By Associated Press.
NEW YORK, Sept. ia vigorous
defense of syndicates and their opera
tions in connection with the insurance
business and frank statement of per-
sonal profits gained through their
operations made by Frederick Crom-
WELL treasurer of the Mutual Life
Insurance company, was the feature of
today's session of the special legislative
committee appointed to probe methods
of life insurance companies in this
state. The defense of the syndicatcs
he was, called to the stand in the morn
ing. Before he was asked a question
he begged leave to say a few words,
and upon being directed to proceed.
raid:
THE law of combination which af-
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,0o0,o00 The
transactions in my department now
are over $1OO,OOO 900 per annum. When
our receipts were less-twenty years
ago-it was quite possible for us to buy
from bond dealers and pay the sue
cessive profits, but now it is absolutely
impossible to buy acvantageously
large blocks of securities, except as
they are allowed by the combinations
of capital popularity called syndicates
and we have to so into them to get
our investments and get them in suffi-
Client size and at ground floor prices
We could not make our investments
without syindicates and we art part
ners in every syndicate into which we
go. 1 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 pay
ing the successive profits of middle
men.
$45o, 1000, 900 Of Assets
SCI ask you, Mr.. Hughes and the
committee, to consider that we have
now over $3.50, 900 of assets and while
we have over $1OO,OOO,O0O invested In
bonds and mortgages, we are con-
stantly under the necessity of finding
additional investments for our large
accumulations of funds. This is the
condition. 1t is no theory. 1t Is con-
dition which we meet and the exhibits
are here which show how we have to
employ it. Our investments are such
that when Mr.. Tappan, l suppose about
the most widely known and honored
bank president in his day, died In New
York, he left it as condition that his
trustees should have one privilege and
that was to invest the sum in securi-
ties as those of the Mutual Life In
surance company. That is the way we
invested our money, but we could not
a year in the securities bought by this
company without using syndicates."
The acknowledgement of personal
profits was made in tabulated state
ment which was presented to the COM
nlittee after recess. 1t showed that Mr..
Cromwell had made personal profit of
$26,371 from syndicate operations dur
ing the last five years, in which he in
dividually and the Mutual Life Insur-
ance company had participated.
Mr.. Hughes, chief counsel of the
committee, Immediately took up an es-
innate of these syndicate transactions
in an effort to ascertain the manner
in which these profits were obtained.
An interesting point was u -eht out
when probing transaction of the
Pennsylvania railroad 31s per cent con-
vertibles, Mr.. Cromwell made no per-
sonal profit, the witness stated.
Interested In Pennsylvania Road
"Of course we are greatly interested
in the Pennsylvania railroad. I might
say we are the heaviest stockholders, "
he added.
Answering Mr.. Hughes, Mr. Cromwell
said the holdings of the Mutual Life
in the Pennsylvania railroad were $5,-
900, 900 par. Among these transactions
the connection of trust companies with
InS MuIudl Lille was OuJ Wnen
it was stated that the one million
pounds sterling subscription to a Jap
anese loan was shared by the United
States Mortgage and Trust company
and the Guarantee Trust company. In
explaining this relation Mr.. Cromwell
said
We gave these opportunities to the
trust companies in which we held large
interests for very good reasons. AS |
explained this morning we, as an in
surance company. need very large
banking facilities for very large in
terests. 1t goes without saying that 1t
is better for us to use our own COM
panies rather than give to institutions
with which we have no connection the
handling of our large investments. For
this reason. we put men into the direc-
torate of these subsidiary companies