The Montgomery advertiser., 1905-09-14
DEFENSE OF
 SYNDICATES Their Necessary COnncc-
 ton with Insurance. STATEMENT BY CROMWELL -> Mutual Life's Treasurer on
 the Stand. Says the Gigantic Financial Corpora tion He Represents Is Heaviest stoci<heldcr in Pennsylvania Railroad. |

New York, Sept. 13.--A vigorous de- fense of syndicates and their opera tions in connection with the insurance business and a statement Of personal profits gained through their operation, made by Frederick Cromwell, Treas urer of the Mutual Life Insurance Com pany. was the feature of today's ses- ston of the special legislative commits sion appointed to probe methods of life insurance companies in this State. The defence of the syndicate was made by pr. Cromwell soon after he was called to the stand in the morning. Before he was asked question he begged leave to say a few words and upon be- ing directed to proceed said:
 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 sfoo.eeo,o0e. The Itransactions in my department now are lover s1oo.0o0.oo0 per annum. When our receipts were less--twenty years lIago--it was quite possible for us to | buy from bond dealers and pay. the successive profits, but now 1t is abso- l1uteiy impossible to buy advantageous Ny large blocks of securities except as they are foated by these combinations pf capital, popularly called syndicates. and we have to go into them to get pur investments and get them in sum Eient sizes at ground floor prices. We eould not make our investments with but syndicates. and we are parties in l tvery syndicate Into which we go. want to say further that unless we vent into these syndicates we would I Aot be able to invest our funds except l A.rL tsS~ ing the successive profits of middle men.
 | T ask you. MT. Hughes, and the commission, to consider that we have now over S45o.0oo.0o0 of assets and while we have $l00.0o0,00o invested in bonds and mortgages. we are constant iy under the necessity of finding addl- tional investments for our large accu- mulations1 of funds. if Is n condition which wS meet and fhe exhibits are here which show how we have Co ems tloy it Our investments are such that when Mir. Tappan. l suppose about the most widely known and honofed bank president in his day in New York, died he left it as a condition that his treas- urer should have one privilege and that was to invest in the same securities as those of the Mutual Life Insurance Company. That is the way we invest ed our money. but we could not make tho transactions of one hundred mill lions year in the securities bought by this company without using syndi- cates."
 Personal Pronts.
 The acknowledgement of personal profits was made in a tabulated state- ment which was presented to the com mittee after recess. It showed that MT. Cromwell had made a personal profit of $26,S71 from syndicate opera tions during the last five years in which he individually and the Mutual Life had participated.
 Mir. Hughes. chief counsel of the l committee. immediately took up each f item of these syndicate transactions in an effort to ascertain the manner in which these profits were obtained An interesting point was brought out when probing a transaction in Penn syIvania Railroad Ia convertibles in which Mir. Cromwell made no personal profit. The witness said:
 "of course we are greatly interested in the Pennsylvania Railroad. might say we are the>heaviest stockholders"
 Answering Mir. Hughes, Mir. Cromwell said the holdings of the Mutual Life in the Pennsylvania Railroad was 95,00O.- 900 par. Among. these transactions the connection of trust companies with the Mutual Life was brought out, when 1t was stated that the million pounds sterling subscription to Japanese loan was shared by the United States Mort gage and Trust Company and the Guar antee Trust Company. In explaining this relation. Mir. Cromwell said:
 We gave these opportunities to the trust companies, in which we held for very good reasons. As explained this morning, we. as an insurance company, need very large banking facilities for very large interests. It goes without saying that 1t is better for us to use our own companies rather than to give to institutions with which we have no connection, the handling of our A2rge investments For this reason. we put men Into the directorate of these sub sidiary companies to look after the in- terests of the Mutual. They are not there for the profit of the interest on the paItry S1Oo shareS they have to hold. but to protect the Mutual
 T have 100 shares in these companies as a director. but l have never made any secret of 1t.
 Profit for PoIicyhOIders. "The result of our connection with these companies Is that in fourteen wears we have made through them a nrofit of $16.Oo0.Oo0 for the poIicyhold- srs If we had not these institutions, Sye should have to turn the Mutual into l a hanktnK tnsNAtuhAOh AS WcAt aH A lAI0 Insurance company. This we could not i do.
 ratural we should help these subsidiary instjtutions to make money, and should throw opportunities their way. The r.ar ws put in them are not there for thsir own profit. They never get a dol- tnr ont of the Mutual unfairly, and
 n,,.ry cent they make through these tr,,st companies and banks for the Mu- t,,a1 ,s for the policyholders and the polIcyholders alone:
 p' I,,st before closing the inquiry for .A dov MT. Hughes said:
 .'vte had some talk this morning in
 r.ctjon with another insurance com- Co.', of joint accounts. Have you any
 or ..Ne Sne' sir. we have not and never have
 " 'rsnlied Mr. Cromwell. we have
 hsu, ,rtners in our investments; that
 no P Investments we make are made
 ls. snS NJutual Life and what is done for
 IS. ny 'n Mutual Life is done for the policy
 ho1uei hon1,'astioned further on this line. Mir.
 cromwell excepted the syndicate trans
 acs,9 sr9ave YOU any non-ledger assetsP' 1 ..rTs have two; one for s11,000 and ] sthar for 1900. We have a memo