The Hawaiian star. [volume] (Honolulu [Oahu]) 1893-1912, 1905-07-13

therefore publish TINS report IN iull,
, to day.
amounts reported, although not obli-
gated to do so.
I'm the case of the Commercial Trhst
Company of Philadelphia, we would
not consider it equitable to draw
heavily against deposits for the rea-
son that that company is aiding the
Equitable Life by assuming advances
to our agents."
From this letter it is seen that while
the society has the unquestioned right
to draw on its funds, it is not expected
to do so except in case of unusual
necessity"
1t is further seen that it is the policy
of the society to maintain large bal
ances $50 large that they are artificial
ly decreased for exhibit on the annual
reports) i'm those concerns i'm which it
has a large stock interest. This fact
is an illustration of the complications
which attend the injudicious informing
ling of two essentially different lines
of finance.
It will also be noticed that the So
ciety's comptroller states it would not
be equitable to materially lower its
balance with the Commercial trust
Company of Philadelphia, for thc rea-
son that that concern aids the society
by carrying its advances to agents. AS
the trust company receives per cent
per annum on these advances, there
would seem to be no moral obligation
for the society to furnish the trust
company with practically 60 per cent
of the funds required to make the
loans; charging it but per cent, there
for.
Summing up this subject: There are
no reasons connected with the legiti-
mate transactions of a life Insurance
company which require or make de-
sirable the holding on deposit of the
vast sums carried by the society. The
reasons advanced i'm support of this
practice all depend on conditions and
transactions not properly included
among the functions of a life insur-
ance company, and therefore as much
open to criticism as is the condition
they aim to defend.
ENHANCING ALLIANCES WITH
AUXILIARY COMPANIES.
The society has acquired large; and in
one case a controlling stock interest in
banks and trust companies. The theory
on which the purchase of these inter
ests was justified is that the society
might thereby desire the larger profits
which are possible from the class of
investments which may be lawfully
made by trust companies, but which
may not be legally made by insurance
companies.
Judging these investments either on
general principles or on their specific
results, their wisdom is gravely ques-
tionable.
The very foundation Of these extern
sive stock ownerships is an attempt
to do by indirect, that which may not
be done by direct means; and this in
itself is a departure from that dignity
which should attach to every phase of
life insurance. Having made the in
vestment, the society finds it necessary
to protect and nurse it. The society
then finds itself involved with interest
which, to quote the words of President
Alexander, USED in another connection
Are not necessarily parallel with
those of the nolicyholder
In the remarks under the heading of
excessive cash balances" it has been
shown that the society carries abnor-
nal balances with those concerns in
which it holds a considerable stock
interest; and the society's comptroller
say that the reason for this must be
obvious" The fact that the society
does not carry excessive balances in
institutions in which it does not have
a large stock ownership indicates that
| these large balances are maintained
for the purpose of aiding the concerns
with which they are deposited. In
making these investments, the society
is concerned not merely i'm the amount
it realizes in dividends as constituting
proper return on the investment, but
becomes actively engaged in the build
ing UP of the auxiliary concern in or
der TO show appreciation in market
value of the original investment.
| Having been committed to suen a
policy, complications increase which
| force the society away from the posi-
| -icn Of an investor which it should oc-
| cupy int that Of a promoter and ma
nlpular. which It should not occupy.
! Under date of August 80, 1901, Presi-
! dent Alexander writes to Mrs ]. H
Hyde: 81 am glad you watch the bank
and that it is doing so well, but we
must perform some coup and increase
its size and Importance. Also in the
case of the Mercantile. I would like
to buy a couple Of trust companies and
double up that concern" 1t seems
needless to state that the making o.
coup" to enlarge banks of the buy
ing of trust companies are not proper
subjects of concern to a life INSURANCE,
company.
Under date of July 2S, 1903, Presi
dent Alexander writes: "As to money
several thousand shares of stock car