New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1905-09-08
MUTUAL IN LIMELIGHT.
SYNDICATES HERE, TOO.
Trust Companies Pay PoIicyhoiders
9 Per Cent on Deposits.

of which Attorney General Mayer has Instituted
suits against directors of the Equitable Life
Assurance Society were part of the regular
business routine Of the Mutual Life Insurance.
Company, according to the testimony of Fred
eric Cromwell. treasurer of that company, before
the legislative investigating committee yester-
day. Under adroit examination by Charles f.
Hughes Mr.. Cromwell declared that he and
several others of the directors Of the Mutual.
most of them members of the finance
mittee went in as underwriters of the syndi-
Gates whose success was assured by purchases
in open market by the Mutual.
Mr.. Cromwell could not remember Just who Of
his fellow directors had been members OF the
various syndcates nor exactly what bond is
the Mutual had taken, the profits
made. He said. subject to revision. that Richard
A. McCurdy president of the Mutual. had been
in most of the syndicates Augustus II. Juilliard
had been in some. he thought. and James Spey-
er. through Speyer &c Co. managers of many
of the syndicates
There was nothing particularly wrong that
he could in investing in those syndicates
Mr.. Cromwell told the committee. The Mutual's
directors, he said did not go into the syndcates
unless the Mutual of the underwriters:
therefore the company always profited largely
by the success of the syndicates. just as tha
individual underwriters profted.
For a long time 1 did not go into those
transactions" said Mr.. Cromwell, "but I found
others doing so, and I'm a very busy man.
with large interests to watch. and it is hard for
me to investigate values personally. I often in
vest III bonds taken BY the Mutual be-
cause l feel that such investments would be
safe
MIR. CROMWELLjS TESTIMONY.
The question of syndicate transactions came
at the morning session, when Mr.. Cromwell
testifying regarding the relations of tho
subsidiary trust companies to his own insur-
ance company and explaining the of such
institutions to insurance companies in general
He told them of purchases OF Cuban bonds by
the Mutual and the Guaranty Trust Company.
controlled. he acknowledged. by the Mutual. Re-
called at the afternoon session, from general
testimony about that particular bond transact
ton he led by Mr.. Hughes to explanations
of the usual market customs regarding under
writing bond issues and confessions regarding
his own participations and those Of other Nut
uaI directors.
This testimony. most like the expected "sensa-
tions' predicted by the advisers of a Legislative
inquiry, caused great interest among the law
yers at the hearing They followed closely every
word the witness said, bending forward to catch
his answers, which were hardly audible ten feet
away. Almost equally they were interested ir his
explanations of the benefits the insurance cornpa-
MES derived from the trust companies, although
large sums Of the insurance companies funds
were kept on deposit expressly for the benefit
of the trust companies.
Mr.. Cromwell was called at the morning ses-
sion Immediately after William Alexander, sec
retary of the Equitable had finished his testi-
mony. The treasurer of the Mutual said that
besides holding that office, he director In
the Delaware and Hudson Railroad, the Guar
he ciaI
Company of New-York, the New-York Dock
Company, the Atlantic Avenue Railway Com
pany, the Nassau Railroad, the Fifth Avenus
Trust Company. the Manhattan Trust Company.
the Mutual Alliance Trust Company. the Ma
tional Bank of Commerce and many other con-
Germs. Mr.. Hughes plunged at once into inter-
rogation regarding the conduct OF the company's
financial affairs and the holdings of the stock
of other companies.
Mr.. Cromwell in answer to his questions. said
that questions of investment of the company's
funds especially as to the purchase of securi-
ties were passed on by a subcommittee of ths
finance committee, which sometimes might COM
plete transaction before referring it to the full
committee for an opinion. In such a case it's
action would not be reversed, he said. Tbs
Mutual held S,64S shares OF the stock OF the
Guaranty Trust Company, he went on-a
trolling interest. He personally held 100 shares
vice-President Grannls and Robert H McCurdy.
he thought were also. Every member of ths
finance committee. he said finally. with the pos
sible exception of Mr.. Grannis. held from 100 to-
300 shares of the trust company's stock. They
acquired this stock twelve years ago. when ths
Mutual purchased its holdings. The Mutual
kept from 100000 to s15O00O0 on deposit there.
receiving per cent interest The stockholders
received 20 per cent dividends.
SOME MUTUAL LOSSES
The Morristown Trust Company another
concern in which the Mutual and its directors
held a controlling interest. Mr.. Cromwell testi-
fed. While this company paid good dividends. is
paid on the deposits placed with it by the Mutual
only . per cent. The Mutual Alliance Truss
Company a concern started on the East Side.
had caused loss of about $4,000 to the Mutual.
the treasurer said. In time he thought the stocs
would pay dividends.
These trust companies were valuable to thu
insurance companies the witness told the ins
vestigators, because they offered excellent facil-
tiles for getting into touch with concerns need<
ing large loans The insurance companies could
carry deposits with them conveniently, and
when 1t came 10 purchasing stocks under~
writing syndicate operations they were most in<
valuable. In that way the Mutual had pur<
chased 5000, 900 OF the Cuban bonds. of vhich
the Guaranty Trust Company took s1.00000O.
No more had been taken. he said. in order tn
avoid possible loss for the Mutual and thu
$1,000 600 had been allotted 10 the Guaranty
Trust Company as a measure of protection to
the insurance company. Mr. Cromwell rather
got into difficulties explaining to Mr.. Hughes
why the Mutual would be loser il ths
trust company owned by ii lost money ths
bonds.
Recalled after recess Mr. Cromwell told