The Barre daily times. (Barre, Vt.) 1897-1959, 1905-09-15
Their Relation to Life InSur-
ance Investment Explained
THEY TAKE WHOLE ISSUES
Then Sell to Insurance Companies, Which
Gould Not Secure Limited Lots
Mutual Makes 4 Per
Cent.

New York, Sept. l9.--inqulry OF the
spe,isl legislative committee on insur-
~. Is aldefmanic chambers yesterday.
49, confined to d further investigation
;nto the affairs OF the Mutual Life Tn.
.nranee company, Chief Inquisitor
unal.ss having called at the outset
r,eaeriek Cromwell, the treasurer Of
fbat company, who had already given
considerable testimony. Mr.. Cromwell
Was followed by James n. Jarvie or Ar
hoekle Bros. Charles r. Henderson Of
Henderson Bros, and also by George
n Baker. president Of the First Ma.
tienaI hank, because all three of those
men we're members al the finance com.
mittee If the Mutual Life Insurance
company.
4ir. Hughes spent three and half
hours ia TRYING to ascertain why it was
that the Mutual Life when it bought
large blocks 81 railroad securities did
pot "a direct To the railroads instead
of having to Join IN with some syndi-
eate. ara he also was apparently not
able 10 understand why the Mutual Life
lett many millions OH deposit with the
National Bank of Commerce drawing
only 2 Der cent interest when money on
cali was frequently a. high as and
Per cent,
treasurer Cromwell and The three
other members of the Aintual's finance
committee explained to the iHsestiga.
tors that tie Insurance company could
net rs direct to the railroad companies
for its securities, because when a COM
many issued d BIG amount of bonds it
4lsls.ss : ts4rssssE
concern which would undertake to dis
pose 81 the entire lot. Then insurance
companys, ID said, could not afford 10
take an eatiTe issue. and the railroads
would not 90 business direct unless the
underwriting concern would take the
entire issue.
Other witnesses shovel that unless
tile issue 81 securities was u be very
small. The insurance company could not
take the entire lot. 1t was even shown
I thai once, when tile Mutual wanted 10
10 direct to the Illinois Central read
/ for It's securities. President Stuyyesant
/ Fish told the insurance men plainly
that the railroad could not ssh to the
/ insurance company direct because the
railroad companies always needed the
assistance If bankers to float big loans.
7 II was the testimony eg AN the mem
i beers 81 the Finances committee thai tie
\ syndicate method 0f buying securities
uas not only the most profitable, bHt
the only practicable way
Each member ~ the finance commit
tee said that he bad never been in q
I syndicate which had sold securities so
the Mutual, but that they had been
IN syndieates III which the Mutual was
one 81 the participants II was "A
/ planned that the reason Why the Mutual
1 had 70 deposit many millions ut 2
per cent was that ii hadn't the ma
ehinery for lending money at retail
/ Ihe finance committeeman testified
that the insurance company did not
have The machinery To put out let 81
small loans On mortgages from Seattle
t. Atlanta, but that the trust conn
pany vas ii 4 position to make i spec
Ialty ct that kind 81 business.
I AlF. Cromwell testified that the rea-
son why the Mutual kept an average
ct 100000 en- deposit with the Ma.
/ Ional Bank Of Commerce from Jun. 8,
la05, 70 June &, 1905, was merely that
Il was necessary for the Insurance COM
panE ~ store up big sums in some
bank e Offset large syndicate payments,
and also that even when no large pay.
ments we're to be met, and even when
eah money was 5 and per cent, IL
Was more profitable III the long run
% go the bank handle lump sum of
many millions, for which it paid the
Mutual PET cent fiat, than II would
ne ter the insurance company 10 try
to peddle ont the millions III many smaii
call loans
Ar. Cromwell aeAied emphatieally
that e vas because the insurance COM
panX controlled tile bank that Il kept
On deposit IN the hank unnecessarily
lalge sums, merely for the purpose 81
ie6tlng the bank make big profit BY
getting lot of insurance money much
cheaper than the market rate.