Evening star., 1905-09-14
INSURANCE INQUIRY
Matter Resumed in New
York Today.
CROMWELL ON STAND
TREASURER OF MUTUAL LIFE IN
SURANCE COMPANY.
Continued Explanations of Syndicate
Operations-Bank Stock
Owned.
CROMWELL ON STAND

the first witness was Frederick Cromwell
| treasurer of the Mutual Life Insurance
| Company. Mr. Cromwell was being ques-
| toned by Counsel Hughes when the COM
mittee adjourned yesterday and today he
! continued his explanations of syndicate op-
erations in which the Mutual Life partici-
| pated.
Balances of from 100000 to sIOOO0OOO
maintained in the National Bank OF Com
merce of New York I'm 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. Mr.. Cromwell denied that these bal-
ances were kept there to help the National
Bank of Commerce make money. The Mu-
| tual Life being a large stockhoIder In the
| bank. he said, was naturally favorably dis
posed toward maintaining "A large balance
| there especially when the money was not
needed. Mr.. Cromwell. questioned further
| on the subject. said that ii was brought ont
that the Mutual Life Insurance Company
| owns 3oosS shares of the stock of the Ma
| tional Bank of Commerce
The relations of the Mutual Life Ins,,r-
| ance Company with trust companies were
| touched upon again today. and while on
| this matter Mr.. Cromwell detailed the con-
| nection of this company with the TITLE
guarantee and Trust Company. we
| thought this company a particularly good
| investment at this time" said he so
| we took SLIGO eco of its shares on this
| we have drawn 81 % lol0. These shares
| therefore, cost us less tEan nothing They
| are now selling at over coo par value
| Slco). We now hold $J09. .OGO of this stock
| at par. We keep SJ0O,co0 on deposit there"
Rate Per Cent Paid.
a statement showing the rate per cent
paid by various trust companies to the Mu-
tual Life was given by Mr.. Hughes.
Now, find" said Mr.. Hughes, the Mu-
tual company is only forty-first in the list
| OF trust companies according 10 the inter-
est they earn as assets. Can you ex-
plain with all your facilities for syndicate
and other operations you cannot earm
more?'
Mr.. Cromwell said that as the company
only invested in first-class securities IL
could not get the highest rate OF interest
1t had only S5.O00,0O0 In foreclosed property
whereas 1t had acquired property now
worth S33,ooooOo at cost of $4,000 600
Inc large prof1t thus earned through rise in
values more than made up for any appar-
ent loss through low interest" said Mr.
Cromwell.
Mr.. Cromwell was asked how far the good
will of the Guarantee Trust Company was
dependent upon association with the Mu-
tual
The trust company is helped by the as
sociation," said Mr.. Cromwell IF il ceased
no one can say what would happen, but
think the value would be maintained The
matter of the ownership OF the subsidiary
trust companies by the Mutual Life is not
matter that has been concealed Ii is all
stated In our books, and the relations there
of are spread upon our records
other life insurance COMPANIES" said
Mr.. Hughes, do not use trust companies
and make more money. / want to find out
what exact value these trust companies are
to you"
Mr.. Cromwell replied: 1--WE have so4o.ooo-
900 of personal securities and there is not
one that is not paying interest. We could
lend, no doubt, great deal of money at 3
per cent, but not safely, and safety is our
main concern. The western companies can
quite likely lend money on mortgages in
Milwaukee and other places with absolute
safety at . per cent, but We cannot here.
Then We charge our policy holders only 5
per cent on loans. while other companies
charge per cent"
Received Interest.
Mr.. Hughes then elected from the witness
that the Mutual Life received 3lk per cent
interest on debentures taken from the Unit
ed States Mortgage and Trust Company.
though the latter loaned money on mort
cages at per cent. The difference went to
the trust company.
James NJ. Beck, counsel for the Mutual
Life, interrupted by saying that the Mutual
Life had the personal guarantee of the trust
company behind its debenture, besides the
value of the securities against which they
are issued.
Mr.. Hughes remarked: "The personal
guarantee of the trust company. of which
the Mutual is itself one-half." He elected
the fact the Mutual had a committee to
watch the trust company.
why don't you loan directly yourself
then?" asked Mr.. Hughes.
Because we don't loan on real estate Sc
curities; We have not the machinery"
You say you don't, but you really do"
said Mr. Hughes.
Mr.. Cromwell was excused with a reauest
to prepare statement showing how much
more the Mutual Life would have obtained
If IL had loaned directly on real estate in
stead of through trust companies
James A. Jarvie member of the firm of
Arbuckle Bros, trustee of the Mutual
Life Insurance Company and a member OF
the finance committee, followed Mr.. Crom-
we'll Mr.. Jarvie testified that he was also
a director In the Central Trust Company,
the Bank of America, the National Bank OF
Commerce. the Guarantee Trust Company,
the Mutual. Alliance Trust Company, the
Morton Trust Company and two or three
others. The witness was questioned along
the line of the syndicate operations upon
which Mr.. Cromwell was questioned yes
terday. Mr.. Jarvle's firm had participated
In number of syndicates with the Mutual
Life, but Mr.. Jarvie said that his firm was
in no way Influenced by the action of the
Mutual Life as they had participated in
syndicates long before he had any connec-
tion with the Mutual Life. AS Mr.. Jarvie
was leaving the STAND attorney BECK, ior
the Mutual Life asked Mr.. Hughes for per-
mission to ask a question or the witness.
The question brought out the statement
from Mr. Jarvie that he would not remain
a trustee If the right to invest his private
funds was impaired by any conditlon at
tached to the Office. Mr.. Jarvie did not
think the Mutual Life could get a board of
trustees IL IL made any such conditions.
Henderson Called Next.
Charles R. Henderson, trustee and mem-
Der of the finance committee of the Mutual
Life who was next called. said the use OF
banking houses as Intermediates in making
large investments was necessary. There
was no means by which these profits made
by the bankers could be obtained by the
insurance company, he said. Mr.. Hender-
son said he had participated In some of the
syndicates in which the Mutual Life was
also interested but that he had never al-