Evening star., 1905-09-13
SHIP MAN ON RACK
Interested in New York Life
Inquiry.
SYNDICATE ACCOUNTS
ATTORNEY HUGHES ASKED PER-
TINENT QUERIES.
Buy and Sell Bonds Same Day
Profits Paid to
Bankers.
SYNDICATE ACCOUNTS

NEW YORK, September I3-Freder1ck III.
Shlpman, assistant treasurer for the last
three years of the New York Life Insurance
Company, was the first witness before the
legislative insurance investigation today.
He was examined on syndicate accounts.
The Toronto. Hamilton and Buffalo deals
were the first taken up. and the accounts
were gone into in detail.
How could the New York Life" asked
Mr. Hughes. counsel to the committee. re
tire Toronto. Hamilton and Buffalo bonds
from the syndicate at 90 when 1t had
bought them while in the syndicate at 9l?'
Because the market price. in the opinion
OF G M. Gibbs the treasurer at the time
was then %. We credited the profit. a4.-
9S6, to profit and loss -
Mr. Shipman I'm reply to further ques-
tions said the company raised the price
from 91 to 90, but that the profit had never
been realized. and the company holds the
bonds at the present time
The New York Life in this case" said
MI. hughes, did not return bonds as Is
customary, to the syndicate managers but
TOOK them themselves and credited on tha
books a profit, which. in fact, had not been
made?"
Yes"
Next Mr.. Hughes turned 10 Joint ac-
count or Goldman. Sacks & Co. and the
new YORK Life In 1899.
me account was created I'm order TO in
vest In Chicago and Northwestern railroad
bonds with an agreement for euuaI division
of profits. Mr.. Shpman said IT should not
be called a syndicate
How can you explain that on July 10
ls'? you buy and sell 100 bonds on the
same day. according to your statementg''
asked Mr.. Hughes.
Transferred to Joint Account.
The only way ] can explain IT." Mr.
Shipman replied, lis that the New Yorl,
Life held these bonds and wished to sell
them Therefore ii named a fair price and
transferred them to a joint account"
Now, don't you see the purchase is not
count 1t. too. was purchase of bonds
Life Insurance Company?"
Il can't say; it is six years ago"
Is 1t fair to say that the New York
Life enters into an agreement with others
and provides the money for the purchase
or the bonds and then gives the members
Yes"
Does IT mean the New York Life pavs
one-half profits to bankers to get them 10
handle the syndicates?"
Yes, l think 1T is sometimes advisable
In order to get the business"
The Chicago. burlington and Quincy deal
was next investigated. w. S. Fanshawe
was the other member of this Joint ac-
count. 1t, too, wa purchase of bonds
for resale. amounting to 100000 to $780,
600.
There seems n great many of these
joint accounts" said Mr.. Hughes rs it
safe to say they, are all speculative, like
the Chicago Northwestern?"
w. S. Fanshawe. Mr.. Shipman said. is n
new member of Harvey Fisk & Co He
was formerly in business on his own ac-
count.
Wants Separate Accounts
Mr.. shipman was asked to prepare sepo
arate accounts, giving all the details deal.
ing with joint accounts. He said another
syndicate was formed to purchase the stock
OF the Chicago, Burlington and Quincy rail-
road
Mr. Shipman gave way to Edmund RAM
dolph. treasurer of the New York Life Inc
surance Company, who was asked to pro.
duce tho minutes of the finance committee
as TO the authorization OF any purchase oS
bonds for resale on joint account. These
minutes showed the treasurer was empow-
cred by vote on September -. 1904 to buy
of w. S. Fanshawe up to 81. 100000 of Chi
cago, Burlington and Quincy As at 81 10
97ik. and on October 3, 1904, the minutes
show this purchase was made. After prob
ing into the joint account in Chicago and
Northwestern with Goldman, Sachs & Co.,
In which 1t was shown a sale was author
lied by vote OF the committee with pront
to the company of So 22J Mr.. Hughes asked
as to any record of sale of the Chicago,
Burlington and Quincy bonds. Mr.. Ram
uOlpN was 10 readily Iln0 lnlS ana
asked to be allowed to have these matters
presented in tabula ted form, and the mat
ter was temporarily passed. He said all
the transactions in joint account have been
In bonds. He declared he had never pare
tcipated in any syndicate. had never spec
ulated nor made a penny OF profit. nor de-
rived any revenue beyond his salary from
the company.
Must Use Syndicates.
Frederick Cromwell. treasurer of the Mu-
tual Life Insurance Company. was recalled.
He made a statement to the effect that It
is impossible for life insurance companies
to seek investments nowadays without the
aid of syndcates. He said that heretofore
business could be conducted through bond
brokers, but today IL must be con-
Quoted through combination of big cap
ital:sts. The Mutual. he said. is doing a
business of S100,oW,009 year, and they
must seek the medium of syndicates. This
company he said has sfJ0.O00.OOo invested.
of which sum si5O,0o0.0o0 is in bond and
mortgage Mr.. Cromwell expatiated upon
the advantages of investing through syn
dicate. I'm fact" he said. I'VE could not
with safety invest our money without a
syndicate managed by a banker. We can
not do the banking. Further. we could not
compete with the combinations of bankers.
Then, too. with our syndicates we can get
In on the ground-floor price"
To test this Mr. Hughes took up an Item
in 1904, when the Mutual Life Insurance
Company, IN a syndicate, look up t4,OoS,oO
of republic of Cuba bonds at 81 GIG. These
bonds were issued by the republic of Cuba
at ~. or 3 GIG per cent cheaper than the
syndicate price. At this point Mr.. Crom.
well addressed the committee and protested
that while he and his company had partic-
ipated in many syndicates, he handed hst
of all these to the committee ana hao noun
ing to conceal. II want IL thoroughly un-
derstood" he said, that in all these trans
actions there never was condition nor an
obligation imposed upon any member OF
these syndicates by which they would be
Mr. Cromwell apoIogized for his tenn
porary agitation, and Mr.. Hughes replieds
.Your frankness and candor are commenda-
BILE"