Omaha daily bee., 1905-09-14
ATFAlhO Uf MUTUAL
New YSrk COMMITTEES Probing Financial
Methods Of Insurance Company.
TREASURER DEFENDS SYNDlchTES
Says They Are Legitimate Channel for
Securing Investments At Cost
OFFICERS LARGE PERSONAL PROFIT
Ir, Cromwell Says he Made S230,561 in
Five Years from These Tranaaotioni
RELATIONS WITH TRUST COMPANIES
Big Deposits Made with Subsidiary
Corporations in Return for Use
of Banking Facilities on
Large scale.
Says They Are Legitimate Channel fol
Securing Investments At Cost.
OFFICERS LARGE PERSONAL PROFIT
M. Cromwell Says he Made S230,561 in
Five Years from These TransaotionL
RELATIONS WITH TRUST COMPANIES

NEW YORK. Sept IA vigorous de-
fense Of syndicates and their operations
in connection with the Insurance business
and a frank statement OF personal profts
gained through their operations made by
Frederick Cromwell, treasurer OF the Mu-
tual Life Insurance company, was the fea-
ture of tuday's session Of the special legis-
lative committee appointed to probe meth
DDS Of life Insurance companies in this
state. The defense OF the syndicate was
made by Mr.. Cromwell soon after he was
called in the morning Before he was
asked question. Ire begged leave TO say
a few words and on being directed to pro-
ceed said:
The law OF combination which affects
finance, as everything else, has made syn
dlcates necessary. When | became treas
urer Of the Mutual Life Insurance company
the total assets Of company were Sl0O-
OOO.OO0. The transactions in my department
our receipts we're less-twenty years ago,
II was quite possible for US TO buy from
but BUT now % Il is f absolutely civ impossible to buy buy
adVantageously large blocks Of securities,
except as they are fioated by these com
binations Of capital. popularity called syn
dicates, and to have TO go into them to
get our Investments and get them in suf
fictent size and at ground floor" prices.
We could not make our investments with
out syndieates and we are partners IN
every syndicate into which we go. l 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 paying the successive prohts
ask YOU. Mr.. Hughes. and the com
mittee TO consider that we have now over
$3.50, 100000 OF assets and while we have over
H00.0o0.000 invested in bonds and mort
cages we are constantly under the neces-
slty OF finding additional investments for
our large accumulations of funds. This Is
the condition. II Is no theory. II Is a con-
iition which we meet and the exhibits are
here which show how we have 70 employ
Mr. 9Hr TappaH' aHeSIsni Suppose s about % the most
widely known and honored bank president
in his day in New York. died he left Z as
a condition that his trustees should nave
one privilege and that was to invest the
same in securities as those of the Mutual
Life Insurance company. That Is the way
make @ 1nVfssea ths trsnsactions P OF so 900 year
in the securities bought by this company
without using syndicates
Treasurer's Personal Profits.
.. The Acknowledgement OF personal profts
was made in a tabulated statement, which
was presented to the committee after re-
cess II showed that Mr.. Cromwell had a
personal profit OF S23O,26l from syndicates
during the last ive years which he in
dviduany and the Mutual Life Insurance
company participated in.
Mr.. Hughes chief counsel for the COM
rnittee took up each item OF the syndicate
transactions in order 10 ascertain the man
ner in which these prohts were obtained.
An interesting point was brought out
when probing transaction in Pennsyl-
vania railroad S1h convertibles. in which
Mr Cromwell made no personal profit, the
witness stated: "Of course we are greatly
Interested in the Pennsylvania railroad. I
might say we are the heaviest stockhold-
ers"
Answering Mr. Hughes Mr- Cromwell said
the holdings OF the Mutual Life in the
%
: Among these transactions the connection OF
trust companies with the Mutual Life was
brought out when Il was stated that the
e1 eDO.000 subscription TO a Japanese loan
was shared by the United States Mortgage
md Trust company and the Guarantee
Trust company. In explaining this Mr..
Cromwell said: I'VE gave these opportuni-
ties 20 the trust companies in which we
held large interests for good reasons As
explained this morning we as an insurance
company needed large banking facilities for
large interests 1t goes without saying
that 81 Is better for US to use our own COM
punies than give 20 institutions with which
we have no connection the handling OF our
large Investments. For this reason we put
men into the directorate Of these sub
sidiary companies to look after the inter
ests OF the Mutual. They are not there for
the proht OF the interest on the paltry 100
shares they have 20 hold, but to protect
the Mutual It is natural we should wish
20 put In as directors OF these companie
the same men as are on the board OF the
Mutual
Il have 100 shares in these companies as
q director, but l have never made any
secret OF Il
Proats TO Policy Holders.
The result OF our connection with these
companies is that in fourteen years we
have made through them a profit of Sl6-
10000 for the policy holders II we had not
these institutions We should have to turn
the Mutual Life Insurance company into
a banking institution as well a life in
surance company. This we could not do
This being the state of the case il is
natural We should help these subsidiary
institutions 10 make money and should
throw opportunities in their way. The men
we put IN them are not there for their own
profit. They never get dollar out OF the
Mutual unfairly, and every cent they make
through these trust companies and banks
for the Mutual is for the policy holders and
the policy holders alone"
Just before closing the inquiry for the
day, Mr Hughes said:
I'VE had some talk this morning In con-
nection with another insurance compapy
about joint accounts Have you any OF
these?"
\ mo. sir. we have not and never had,
replied Mr. Cromwell. 1--WE have no partner
In our investments. that Is. any invest
ments We make are made by the Mutual
Life and what is done for the Mutual Life
is done for the policy holders"
Questioned further on this line. Mr.
Cromwell excepted the syndicate transae-
tions.
Have you any non-Iedger assets?'
Queried MF, Hughes.
We have two. one for Sll.O0o and the
other for $500 We have a memorandum OF
them with the finance committee. but they
are not counted as assets, There are some
shares that have no face value al present.
and We are holding them for any result
that may accrue"
Mr. Cromwell said The Mutual had never