The Billings gazette. [volume] (Billings, Mont.) 1896-1919, 1905-09-15
METHODS OF
MUTUAL LIFE
LEGISLATIVE COMMITTEE CON-
TlNUES INQUIRY.
CROMWELL ON THE STAND
sheds Some Light on Ethics of High
Finance - Some Questions
Staggered Him.
[Scripps News Service.l

New York, Sept. 14.-Frederick
Cromwell was recalled to the stand
this morning upon the resumption of
the legislative committees investiga-
tion into insurance affairs.
Attorney Hughes questioned him re-
garding the balances the Mutual Life
carried in banks from january, 1900,
to December 1904. The statement
submitted by Cromwell showed bal
ances ran from $6,000,Uvu to $10,000,-
600. In explanation the witness said
that large balances were carried when
large payments had to be made be
cause the banks paid two per cent in
terest ON them and that the money
required could not always be invested
to such advantage. Cromwell denied
that the balances were carried to give
the banks chance to use the money
of the company.
Hughes showed that the Mutual car
ried no deposits in the National Bank
of Commerce prior to May, 1900, but
that it now owns 36,088 shares of the
capital stock of the bank and does
business there. Cromwell explained
that previous to this they had no i'm
terest in the bank" The attorney
next questioned him along technical
Times as regards interest ON assets.
1t was shown that other companies
were getting higher rates. This the
witness explained by saying that the
Mutual would not make loans where
others would, considering the security
offered as insufficient.
sasaF Ethics OF High Finance.
Cromwell enlightened the commit
tee on the ethics of high finance from
AN insurance company's view He
elaborated upon the question of HON
or which prevented a company from
becoming member of syndicate to
deal in bonds which lit did not carry
regularly as an investment, although
by which clear profits were promised,
but which allowed the company to
reap profits through auxiliary conn
panies, the stock of which it controll-
ed.
Interesting disclosures were brought
out when Hughes questioned the witt
ness concerning half million of Mis-
souri, Pacific bonds, which the conn
pany purchased. The bonds were talk
EN- by the Mutual and distributed
among the companies that it controll-
ed. A syndicate bought the bonds at
81 and agreed to sell them at 95,
promising clear profit of four points.
Cromwell was asked why the Mu-
tllal abandoned the chance to make
clear profit ,by Immediately transfer
IN ST nonihS
To this answer was made that when
lit was first asked to join the syndicate
it had refused to do so. Hughes de-
manded to know why it had refused
to participate in the syndicate.
Cromwell eXcitedly answered, Il
would rather you would not press the
question: He then said that the Mu-
tual had never handled Missouri Pa
cific bonds and did not consider it ad-
visable to go into a syndicate which
had for its ayowed purpose the dealing
in securities that the Mutual did not
handle as an investment.
Hughes inquiries brought out the
fact that the matter of how deposits
of the company were to be made was
left entirely to the discretion of Crom-
we'll as treasurer, without interfer-
ence from the finance committee.
Three trustees placed on the stand
gave testimony to substantiate the
''law of combination" as set forth by
Cromwell yesterday which forced in
surance companies into syndicate op-
erations. They declared that the
banking houses practically monopolz-
ed the field.