Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1905-09-14
Present Workings Of H.
surance Companies
Defended by Mutual Life Treas
urer Who Says Investments
Of Large Funds Cannot be Invested With
out Aid Of Security Companies.


business and Il frank statement Of per
Sonal profits gained through their Oper-
atoms made by Frederic Cromwell
treasurer OF the Mutual Life Insurance
Co., was the feature of tOday'S session
of the speciLl Legislative committee ap-
pointed 10 probe the methods OF life in.
suralce companies in This state. A Dc.
Tense Of the syndicate was made by Mr.
Cromwell soon after he WAS called to
the stand i'll the morning and before he
was asked u question. he asked leave u
say a few words and upon being direct
cd to proceed. he SAID:
THE law of combination which
effects finance as everything else has
made Syndicates necessary When |
became treasurer of the Mutual Life
Insurance Co.. the tofaI assets of our
company were $l0O,00O.000 The trans
actions in my department now are over
500. O00.00 per year. Whom our receipts
we're less-2O years aga-it was quite
possible for us to buy from bond deal
ers ana pay the successive profits that
might come with brokers, but now it is
. bsoiutely impossible 10 buy ndvan-
tageously large blocks OF securities, eX-
binat tons OF capital, popularity called
syndicates. and We have to go into
them to get our investments and get
them III sufficient siZa and at ground
floor prices. We could not make our
investments without synd1cates, and
we are partners in every syndicate
which we go into.
II 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 pay
the successive profits Of niddlemen. l
ask you, MIR. Hughes. and the commit
tee. to consider that We lave now Owe;
$3.50, 600, 900 of assets and while We have
over 500 100000 invested III bonds and
mortgages, We are constantly under the
necessity Of finding additional invest
merits for our large atcuraulatiOnS Of
funds.
That is the condition. 1t is no
theory. 1t is 4 condition which we
meet ana the exhibits are here which
show now we have To employ it. Our
investments are such that when Mr.
Tappan, | suppose about the most
widely known and ilonored bank pres
left it as Il condition that his trustees
should have one privilege and that was
10 invest the same III securities as
those of the Mutual Life Insurance Co.
That is the way we invested our
money, but we could net make the
transactions of 800. OOO. 900 q year In the
securities bought by this company
without using syndcaies."
The acknowledgement Of personal
profits was made in IL tabulated state
ment which was presented TO the COM
mittee after recess. Il stated that Mr..
Cromwell had made a personal profit OF
$26371 from syndicate operations dur
ing the past five years. in which he IN
dividualy and the Mutual Life lnsur-
ance Co. had participated.
Mr.. Hughes, chief counsel to the COM
mittee, Immediately took up each item
Of these syndicate transactions in IN
effort TO ascertain the manner i'll which
these profits We're obtained. The entire
afternoon was taken up in probing
these items. Mr. Cromwell was frank
and candid in his replies and LITTLE
time was taken up in hypothetical
questions as on some of the previous
days Of the inquiry. An interesting
roint was brought out when probing "A
transaction In Pennsylvania Railroad
of halt convertibes, in which Mr..
Cromwell made no personal profit, the
witness stated ''of course we are great
ly interested in the Pennsylvania Rail
road. | might say we are the heaviest
stockholders"
Answering Mr.. Hughes. Mr.. Cromwell
said the holdings of the Mutual Life in
the Pennsylvania Railroad was &,OU,UJ
par Among these transactions, the con-
nection of trust companies with the Nut
ual Life was brought out when IL was
stated that the 81 100000 sterling subscrp-
ton TO n Japanese loan WAS shared by
the United States Mortgage Trust Co.
and the Guarantee Trust Co. In explain
ing this relation. Mr.. Cromwell said;
We gave these opportunities to the
trust companies in which We hold larg"
interests. for very good reasons. AS
explained this morning, we as an lnsur-
ance company need very large banking
facilities for very large interests.
1T goes without saying that 1t Is bet
ter for us to use our own companies rath-
cr than give to institutions with which
We have no connection, the handling OF
our large Investments. For TINS reason,
We put men into the directorate oi these
interests of the Mutual. They are not
there for the profit of the interest on the
paltry 100 shares they have to mold out
to protect the Mutual. IL is natural we
should wish to put in as directors OF these
companies the same men as are on the |
board of the Mutual.
Il have 100 shares in these companies |
as a director, but have never made any |
secret Of it. - |
The result of our connection with |
those COMPANIES is that in IA years We |
have made through them proft OF $ls.-
OOO. 900 for the polcyholders. III we did not |
have these institutions We should have to |
turn the Mutual Life into banking in
stitution as well as life insurance COM
pany This We could not 90;
natural we should help, these subsidiary
institutions to make money and should
throw opportunities In their way. The
mn w.. mt in them are not there for
their own profit. They never got dollar
nmt of he Mutual unfairly and every cent
rhev make through these trust companies
-, LaaI,s far the Mutual is for the NIL