The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1905-09-14
Treasurer of Mutual Life
is Vigorous.
ALSO HE'SVERY FRANK
He Speaks OF The Relations Between
Syndicates and the Insurance Bus
mess, and Makes a Candid
Statement OF Personal Profits
Thus Gained.
Thus Gained.
(By the Associated Press.)


defense of syndicates and their oper-
ations in connection with the insur
ance business and a frank statement
of personal profits gained through
their opera tions made by Frederick
Cromwell, treasurer of the Mutual
Life Insurance Company, was the fea-
ture of todays session of the special
legislative committee appointed to
probe methods of life insurance COM
panies in this State. The defense of
the syndicate was made by Mr.. Crom-
well soon after he was called to the
stand in the morning. Before he was
asked a question he begged leave to
say a few words and upon being dl-
rected to proceed said:
1.-The law of combination which ef-
fects finance as everything else has
made syndicates necessary. When L
became treasurer of the Mutual Life
Insurance Company, the total assets
OF our company were $100, 100000. The
transactions in my department now
are over $10O.000,O00 per year. When
our receipts were less twenty years
ago, it was quite possible for us TO
buy from bond dealers and pay the
successive profits, but now it is abso-
lutely Impossible to buy advantageous
Iy large blocks of securities except as
they are floated by combinations of
capital, particularly called syndicates,
and we have to go into them to get
our investments and get them in suf-
ficient size and at ground floor prices
We could not make our investments
without syndicates and we are part
ners in every syndicate which we go
into. l want to say further that un-
less we went into these syndicates we
would not be able to invest our FUNDS,
except by buying in small quantities
and paying out successive profits OF
middle men.
II ask you, Mr.. Hughes, and the
committee. to consider that we have
now over $45O,COO.00O of assets, and
while we have over $100,000,0O0 IN
vested in bonds and mortgages we are
constantly under the necessity OF hnd-
ing additional investments for our
large accumulations of funds. we
could not make transactions OF one
hundred millions d year in the securl-
ties bought by this company without
using syndicateS."
The Acknowledgement of personal
profits was made in tabulated state
ncnt which was presented to the
committee after recess. 1t showed
that Mr. Cromwell had made a per-
sonal proft of $26.371 from syndicate
operations during the past five years.
in which he individually, and the
Mutual Life Insurance Company had
participated.
A Striking Point Brought Out.
Mr. Hughes. chief counsel to the
committee imme ediately took up each
item of these syndicate transactions IN
an effort to ascertain the manner in
re obtained
interesting point was brought out
when probing a transaction in Penn
syivania railroad IL convertibes,
i'm which Mr. Cromwell made no per-
SCaaI profit, the witness stated, or
course we are greatly interested In
the Pennsylvania Railroad l might
say we are the heaviest STOCKHOLDERS.
Answering Mr.. Hughes, Mr.. Crom-
well said the holding of the Mutual
Lite in the Pennsylvania Railroad w
$4,000. 900 par. Among these trans
actions the connection of trust COM
panIes with tine Mutua. Life wes
brought out when it was stated thaI
the 100000 pounds sterling sub
scriotIon TO a Japanese loan was
shared by the United states Mortgage
and Trust Company and the Guaran-
tee Trust Company. In explaining
this relation, MIR. Cromwell said:
we gave the opportunities TO the
trust companies. RI which we held
large interests for good reasons. AS
l explained this morning we as an
insurance company need very large
banking facilities for very large in
terests.
1t goes without saying it is bet
ter Tor us to use our own companies
rather than give to institutions with
which we have no, connection, tn.
handling of our large investments. For
this reason we put men into the di-
rectorate of the subsidiary companies
to look after the interests of the
Mutual
Booming the Market
Mr. Cromwell told how the Mutual
subscribed $1,000. 900 to the Cuban
syndicate. Speyer & Company had
relied upon the support of the Mu-
tual The Mutual withdrew no bonds
from this first syndicate All the |
bonds were sold to a second syndicate
for 81, and the sellers including the |
insurance company and Mr. Crom-
we'll. personally got their profits.
In the second syndicate the buyers
were the same members as were the
first. The whole block of bonds. S35,-
100000 was sold at the advance of |
two points, said the witness
Then the syndicate marked UP the |
bonds two points and sold them to it.
self under a new name. in order 70
boom the market"
Il think its fair for you to ask