Omaha daily bee., 1905-05-18
BIG LIFE INSURANCE COMPANIES.
Enormous Accommodations OF Money
N source of Peril.

nAS NOhAh
Enormous Accommodations OF Money
source of Peril.
A feature Of life insurance companies 10
which attention is directed by the Equitable
squabble is the enormous accumulations of
money by the companies and the power
for good or i'll which control of 1t imposes.
The surplus of every company grows
steadily, and yet no way has been de-
vised to check the increase, nor do
managers desire to restrict 1t. The con-
sequence of piling up such vast sums is
seen in enormous salaries, extravagant
expenses and manipulation in the pur-
chase of investment securities More inn
portant than this is the menace to the
financial well-being of the country in
volved in the control by a few men of hun
dreds of millions of money.
A correspondent of the Philadelphia
Ledger directs attention to this phase of
life insurance in a suggestive manner. He
says. in part: Just before New Years
little group made up of men whose names
are frequently published in connection with
some of the more important business of
financing or of railway expansion were
chatting informally after business hours
speaking particularly of the outlook,
financial and industrial, for the year 1905.
With one exception, each one of this group
spoke with considerable freedom. All
seem to be very hopeful. 1t having been
noticed that one of the company was
silent, he was at last asked If he did not
agree with the others in their happy
representation. In reply he said that he
was concerned about one thing and had
been thus concerned for more than a year.
4. Al.
the great insurance companies were drifting
or what they were to do in the near
future.
individual fortunes, however. great are
commonly scattered or we'll divided by the
third generation after the maker of the
fortunes. But the great insurance corpora
tions being of continuous life, the cor
poratlon going on no matter how often
death or resignation changed the personnel
of its directors, accumulates and increases
accumulation so that logically there would
ultimately pass into the possession, directly
or indirectly, of these corporations the
control of much of the banking, most of
the railroads and a considerable part of the
industries of the United States.
Il do not know what the outcome is to
be-" this man continued, speaking seri-
ously. ITO my thinking, the accumulation
of these enormous assets, the great sur
plus is the most difficult and momentous
problem that we have to face in this
country"
'Those who heard this man thus ex-
press himself have often wondered since
the disclosure of a quarrel among the man
ayers and directors of the Equitable have
been made whether he did not speak having
some knowledge of that demoralizing situa-
ton. Although he is not of the EQuitab
directorate, yet he is associated with one
of the other insurance corporations, a cor
poration too, some of whose directors have
spoken freely to their friends of the very
difficult questions which the building UP
of enormous assets and of great surplus by
the insurance corporation involves. In one
of these corporations there was serious dis
cussion at one time as to whether it might
not be advisable to seek no more new busi-
ness.
But upon examination it was discovered
that 1t would be impossible to check growth
of that kind without impairing the whole
organization. To refuse to receive new
business would necessarily affect existing
contract, so that there seems to be
nothing for it but to continue to ac-
cumulate. The very impetus which has
produced these great assets and surplus
1t is now impossible to resist without caus-
ing some impairment possibly of assets or
of surplus.
ut is not difficult to demonstrate that
within another generation. IL the growth
of these corporations continues proportion
ately with the growth of the last thirty
| years. they will possess direct or indirect
authority over much of the banking of
New York, some of the banking of other
parts of the country and through loans or
| investments will also have more or less
authority in various railway corporations
! Three of the corporations now control
nearly $1,5OO,OOO,OOO of assets and their ag-
gregate surplus is approximately $3.50, 900 900.
LAS the money rolls in in continuous and
| constantly increasing currents, it must be
| invested and must seek not only invest
| ment in quick assets. but also in real prop
| erty, through purchase or through bond
| and mortgage. Five years ago one of the
foremost thinkers of New York City called
| attention to the growth of these corpora :
| tions, saying that they were, If their
| growth continued, very soon to become xke
real money power of the United States.
| Undoubtedly their resources and their
| power of granting favors and the rich
| opportunities they offered have attracted
| to them some men who are conspicuously
| identified with the great railway expan-
| sions of the United States. Therefore, It
| is now said that one of these corpora
tions, through its loans and its investments
his indirectly, at least, the largest owner
of the securities of one of the great rail-
| ways of the United States.
| "Out of the agitation which has followed
the disclosure of the Equitable quarrel
there may finally come a better under.
standing of what life insurance should be
and how 1t should be controlled or regu.
| lated. Just now there grows an impress
sion among the policy holders that the
rates charged for insuring are altogether
too great. Sometimes men who are borr
| with a gift for an actuarys work have
| figured out to their own satisfaction al
least. that investment in life insurance
policy, looking at 1t from the investors
point of view, is the most extravagant
one thaW a man can make. The figures
these men set down tend to show thai
the charges for premiums are excessive
| They reason that If any purely money
making corporation like bank or a manu-
factory were to carry on their bushes.
as the insurance corporations do, they
would soon find themselves obliged tc
liquidate because they would be unable tC
obtain any business.