The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1905-09-14
HUGE PROFITS in
INSURANCE DEALS
Relations With Banks and Trust
Companies Swell the Insur-
ance Golfers.

New York. Sept. 14.-The relations
OF insurance companies with banks ana
trust companies were taken up when
the insurance investigation was opened
today. The first witness was Frederick
| Cromwell, treasurer of the Mutual Life
Insurance company, who continued his
explanations Of syndicate operations In
which the Mutual Life pa partt iG d.
100000 maintained in the National
Bank of Commerce of New York in
1904 were explained by Mr.. Cromwell,
who said the reason for keeping such
large sums at that bank was that
the bank paid the company per cent
interest, while the insurance company
call at that rate. Mr.. Cromwell de-
MED these balances were kept there
to help the National Bank of Com
1nerce make money. ..
The Mutual Life, being a large
| stakeholder in the bank, he said, was
maintaining a large balance there,
needed. Mr.. Cromwell said that later,
when the market rate for money on
call was 31a per cent, the Mutual
| Life's deposit was still kept in the
National Bank Of Commerce at per
cent.
| IL was brought OUT GHdt GHc uoi
Life owns 36,O88 shares of the stock of
the National Bank Of Commerce.
The relations Of the Mutual Life
with the trust companies were touched
upon. Mr.. Cromwell detailed the con-
nection of his company with the Title
Guarantee & Trust company.
Reaped by Millions.
eve thought this company a partic.
ularly good Investment at the time, -
said he, $50 we took $1,l2o,000 of it's
shares. On this we have drawn ST.
100000. These shares, therefore, cost
selling at over 600 (par value $lO0)
We now hold 100000 Of this stock at
par. We keep 100000 on deposit
| there.''
A statement showing the rate per
cent paid by various trust companies to
the Mutual Life, was given to Mr..
Hughes. CHOW 7 fnd," said Mr..
Hughes, "the Mutual company is only
forty first in the list of trust compa-
as assets. Can you explain why, with
all your facilities for syndicates and
other. operations, you cannot earn
more?'
Mr.. Cromwell said that as the com.
pany invested only in frst-class securi
ties, it could not get the highest rate
of interest It had only 100000 in
foreclosed property, whereas it had &C
quired property now worth $3SS,ooo,ooC
: profit thus earned thru rise in values
. more than made up for any apparent
loss thru low INTEREST," said Mr.. Crom
: we'll.
Mr.. Cromwell was asked how far the
l Guarantee Trust company was depend
ent upon association with the Mutual
"The trust company is helped by
5 the association said Mr.. Cromwell
, eff it ceased, no one can say wha
would happen, but I think the value
t would be maintained. The matter Of tn.
managership of the subsidiary trus
companies by the Mutual Life is not {
E matter that has been concealed It i
3 all stated in our books and the relation
t thereof are spread upon our records. }
e 49, Mr.. Hughes Is Curious. -
.sOther life insurance companies, ,
!. said Mr.. Hughes, edo not use trus
= companies, and make more money.
Z, want to find, out what exact value thes
: companies are to you.'
Mr.. Cromwell replied: "We hav
24O,O00,O00 of personal securities an
there is not one that is not paying in
|
n great deal of money at per cent, bu
=, not safely-and safety is our main con
y Germ. The western companies can quit
y likely lend money on mortgages in Nil
n waukee and other places with absolut
= safety at per cent, but we canno
~ here. Then we charge our policy
4 holders only 5 per cent on our loans
y while other companies charge g. pc
cent?
y Mr.. Hughes then elected from tb
v witness that the Mutual Life receive
= 81 per cent interest on debenture
o taken from the United States Mortgae
f & Trust company, tho the latte
f loaned money on mortgages at 4 pc
J. cent. The difference went to the trus
,. company.
vt James M. Beck, counsel for the NJ,
e tual Life, interrupted by saying thu
9 the Mutual Life had the person;
j. ite debenture besides the value of tt
Ii securities against which they are i
e, sued.
t, Mr.. Hughes remarked: "The person
le al guarantee Of the trust company {
which the Mutual is itself one-half?
He elected the fact that the Mutu
had committee to watch the tru
e company.
70 "Why don't you loan directly Won
a. self, then?' asked Mr.. Hughes
L 'Because we don It loan on real e
le tate securities; we have not the m
TO chinery."
le "You say you don It, but you real
to do,' said Mr.. Hughes
s. Mr.. Cromwell was excused with a I
e. quest to prepare a statement showi1
Us how much more the Mutual Life won
q have obtained if it had loaned direct
IN on real estate instead of thru the tru
y companies.
Id b.
in MUTUAL LIFE AND PENNA.
70 - ... ~