New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1906-02-26
LIMITING INSURANCE INVESTMENTS.

| LIMITING INSURANCE iSod
| The all but universal acceptance by pubic
opinion of the suggestions OF the Armstrong
committee is an impressive testlmonial ho'
merely to the zeal and ability with "hlch the
investigation was conducted, but to the con-
| servettye wisdom with which remedies have
heen advised Senator Armstrong. Mr. Hughes
Mr. NcKeen and their coworkers have zone
what even the most sangune would not nave
dared to predict six months ago. IneS nave
solved the problem of reforming abuses without
disturbing properties; Of satisfying critical
and perhaps somewhat hysterical puohc OF tne
thoroughness and suficiency or their measures
and at the same time commencing themselves
to the good opinion of the judicious. The most
radical are satisfied and the most conservative
find little or nothing Of which they can justly
complain
Practically the only feature Of the report
which eyokes serious criticism is that which
proposes the limitation Of investments and the
sale of stock holdings within five years Op-
position on this point was to be expected, for
the recommendation goes to the heart or all
speculation in insurance funds and the misuse
of those funds TO serve Interior purposes. The
moderation with which objections TO this policy
are expressed, chiefly IN the form OF sugges-
tons of possible injustice to savings banks, Is
rather surprising for the whole Wall Street
interest which has long fattened on the great
insurance accumulations must feel this to be
vital blow at the continuance Of its methods.
In spite of the objections, doubtless honestly
made on the part of many men who fear an ex-
cessive demand upon the bond market and
lowering of incomes from such investments, we
believe that the committees recommendation is
wise. In the first place. nothing short of that
prohibition can break the vicious connection be-
tween the insurance companies and speculative
business. II is possible that the profits of in
surance funds will be decreased somewhat by
the restriction. So. also, testamentary trustees
might, by buying wisely, largely increase their
funds. But IT is not the business of a trustee
thus to make money. speculate he ever so wisely.
The possibility Of rapid advances and high in
terest rates always carries with 1t element
Of insecurity, and even the most experienced
financer is fallible Yet even conceded that
in the long run insurance managers with their
large experience and their vast resources, would
make their companies rich such riches would
not be advantageous TO the policyholder or to
the community, for they leave the insurance
accumulations a prize for the promoters of
great enterprises and as weapons in their finan-
cial struggles. So long insurance companies
are permitted to hold corporation stocks which
carry the control Of banks, trust companies and
railroads, so long will they be involved IN the
pOlicyholders may be sacrificed to the ambi-
tons of captains of industry and commerce
The rules proposed by the Armstrong COM
mittee are much more liberal than those i'm
posed upon savings banks, and we do not believe
that the fears Of the banks are we'll founded
There is to-day certainly no lack of bonds on
the market which are perfectly sound and en-
trely appropriate for insurance investments
which savings banks are not permitted to hold.
Then there is the vast field of investment on the
security OF real estate, which used to be thought
the proper and normal disposition Of trust
funds, but which in recent years has been
neglected by the great insurance companies
under the attractions of speculation. The New
York Life Insurance Company has already dis
posed Of its stocks. Perhaps it did not do this
voluntarily so much to meet the requirements
of foreign business, but II has not failed to
make q virtue of its conduct and TO boast itself
entirely satisfied with It's selfimposed restric-
ton. In fact, aside from a few of the great
companies here the bulk OF the insurance funds
Of the world is so restricted. Most of the
smaller companies, even In this country, hold
comparatively few stocks; and there is no rea-
son TO fear that, with the ample time given for
disposition OF stocks, the transfer Of the hold
ings Of the companies which have departed from
the old sound rule would either depress the
stock market or create an Injurious corner In
bonds
There are undoubtedly many perfectly secure
stocks which might be safely held by insurance
companies in such limited quantities that in
surance investments could not become an in
strument of outside financial interests; but if
the insurance companies are to be kept aloof
from Wall Street rivalries the stock invest
ments would have to be so limited that they
would be Of little service a relief from the
inconvenience which the critics Of the Arm
strong report fear. Moreover, it is almost i'm
possible TO draw the line between proper and
improper stock investments. If they are per
mitted at all, and the only safe way to prevent
n recurrence of the evils of manipulation and
speculation is TO carry out the suggestions OF
| the committee IN all strictness.