The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1905-09-14
.FRENzIED FINANCE
Testimony Regarding Manipula-
ton of Insurance Co. Funds.
Makes Much of LawsOn's Story
Sound Commonplace.

New York, Sept. 14.-When the in
surance investigation was opened today,
the first witness was Frederick Cron-
WELL treasurer of the Mutual Life In
surance company who continued his
explanations of syndicate operations in
which the Mutual Life participated.
Balances of from 81 ,000, 900 to $4,000
600 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 could not have
loaned the money on call at that rate.
The Mutual Life being a large stock
holder in the bank. he said, was nat
urally faVorably disposed toward main
tanning a large balance there especial
ly when the money was not needed. Mr..
Cromwell questioned further on the
subject said that later when the market
rate for money on call was 31s per cent
the Mutual Life deposit was still kept
in the National Bank of Commerce at
2 per cent.
The relations of the Mutual Life
with trust companies were touched on
again today and while on this matter
Mr.. Cromwell detailed the connection
of his company with the Title Guaran-
tee and Trust company. I'VE thought
this company a particularly good in
vestment at the time said he, $50 We
took 100000 of its shares. On this
we have drawn $1,22O. 600. These
shares therefore cost US less than moth
ing. They are now selling at over 500
(par value 5000, we now hold $780,
600 of this stock at par. We keep
100000 on deposit there.
Mr.. Cromwell said that as the COM
pany only invested in first-class Sc
curities, it could not get the highest
rate of interest. 1t had only 100000
in foreclosed property, whereas it had
acquired property now worth $33, 000,-
600 at a cost of $4,000, 900. The large
profit thus earned through rise in VAL
ueS more than made up for any ap-
parent loss through low interest
Mr.. Hughes elected from the witness
that the Mutual Life received 31s per
cent. interest on debentures taken from
the United States Mortgage and Trust
company though the latter loaned money
On mortgages at 4 per cent. The differ
ence went to the trust company.
Mr.. Cromwell was excused with a
request to prepare a statement showing
have obtained if it had loaned directly
on real estate instead of through the
Trust company.
James A. Jarvie, a member of the
firm of Arbuekle Brothers, trustee of
the Mutual Life Insurance company, and
a member of the finance committee. and
Charles r. Henderson, trustee and mem
Der of the finance committee were next
called. Mr.. Henderson said he had par
ticipated in some of the syndicates in
which the Mutual Life was also inter-
ested but that he had never allowed his
private interest in such syndicate to
affect his service to the company.
George F. Baker, president of the
First National bank, trustee and
member of the finance committee of
the Mutual Life next testified.
Mr.. Baker said he was a director of
the Guarantee Trust company of the
Morton Trust company and of the
National Bank of Commerce. He said
it was a just aid to the bankers to
have the insurance companies take
large blocks of stock. 1t helped the
market.
Mr.. Baker said he had participated
in syndicates in which the Mutual had
been interested but had not allowed
such participation to affect his judg-
ment. Both he and Mr.. Jarvie prom
Used to supply lists of such partici-
patton.