The sun. [volume] (New York [N.Y.]) 1833-1916, 1906-03-16

Va pShOy hOt0Clbt NAluco LloIlDCIo OID CulChy
interested in the New York and Mutual
Life companies, and saying that he favored
the committees bills with but few changes,
continued:
The gentlemen at the heads Of the three
great companies who have addressed you
ostensibly on behalf OF the companies whose
policyholders they ought 10 be representing.
although new to their duties and unfamiliar
with the Insurance business. must be awar @
that In the stand they are taking against
these bills they do not represent the wishes
or the sentiment Of the policyholders. They
are struggling to retain for themselves as
much as possible Of the vast power ana pres
tige Of their predecessors Incident TO the
continued control of these great accumula-
lions.
The su m and substance of their combined
argument Is that the policyholders have about
all the protection they need under the law as
II stands. They do not appear 10 realize the
policyholder's existence as a factor. 1t Is
always the company as distln guished from
the policyholder that they have In mind
They seem to think their sole mission lie to
swell the power and RESOURCES of the COM
pauy. no matter at whose expense,
II Ia idle to suggest that these gentlemen
reflect the wishes Of their real employers.
They represent their own natural desire to
retain what they can of the great resources
belonging to the policyholders, 70 the custody
Of which they have temporarily succeeded.
NEW INVESTMENT LAW
Mr.: Untermyer then took up one by
one the most important OF the committee
recommendations. He defended at length
the limitation on insurance Investments.
OF Paul Morton's recent argument on that
point he said:
Perhaps il is 10 ad vance In 70 rmntion on that
subject that Mr.. Paul Morton naively referred
when he told you that there wera movements
already ON foot among a small number of
men TO AK the prices at which the p les
would have to sell these stocks TO them. Let
us at least hope that Mr.. Mor.on's friends
are not among the men with such designs.
But we must be prepared for surprises and
dlsappointments in these strenuous times of
high finance,
The adoption OF Mr.. Morton's suggestion
to allow the companies to retain 20 per cent.
of tn cir bank and trust company stocks fur
nishes no solution. 1t would be the surest
way TO subject the compani les to the pressure
OF these men whom he so greatly fears. The
control OF these banks and trust companies
Is, Of course. far more valuable per share
than any less amount Of stock. None of them
has enou gh stock to sell the control and still
keep 20 per cent. Each of these companies
is to-day. and will be until It can be rescued.
in a steiner grip of a one man power than
~ any tllIl' VI "a hlolplN'
There was a time when Mr.. Perkins had
at least to 60 through the form of consulting
with Mr.. Mccall. That Ia no longer neces-
sary. With 20 per cent. of the stock of each
Of these banks and trust companies safely
resting in the vaults of each OF these insur-
ance companies II la a very sim pie matter
on a comparatively small investment for
these gentlemen by combination to control
all the banks and trust companies in which
the insurance companies are now largely
interested. Besides, 20 per cent Of the stock
In the hand of one Of these companies. with
its power to direct enormous deposits. would
virtually mean continued control. and we
should have these companies forever in the
banking business with all the generalization
and other 'evils-of which a fraction only
has as yet been uncovered.
II this combination of powerful men Of
whom Mr.. Morton seems to be in such mortal
dread want to control these companies. let
them buy them outright. II the companies
must face a paper loss. let them do so now
while our eyes are upon them. From this
time on they may have to reckon with a
factor hitherto unknown and despised-the
policyholder, who is about TO come into his
own. II he will only stay awake.
All we ask OF you in this connection Is TO
prohibit the sale Of these stocks except in
bulk when the company owns q majority.
and then only after ample due notice to the
public and to all the directors of what Is
intended 10 be done.
Unless you safeguard this position against
these huge interests, you will see arise from
the ashes Of this legislation. after the COM
panies get through tinkering with II year by
year. the greatest giant Of bank and trust
company mergers the world has ever
known.
THE ~oSTISGENcY RESERVE QUESTION.
The question OF the amount OF the con-
tingency reserve is perhaps the only one that
presents real complications. In the large
companies the surplus has already reached
such enormous proportions that no future
conting ency reserve Is or ever will be neces-
sary. The interest on that surplus consti-
suites an increasing danger.
The reser yes made by the Insurance De-
are very liberal. The surplus will
take care of any depreciation In securities
many times over. The reserve already
provided for by you Is evidence OF over
caution. The accumulation of
this great surplus has worked grave injustice
to the policyholders, as YOU know.
Your proposed legislation does nothing
to correct that abuse, and / doubt whether
you could remedy 1t. 1t is not in the interest
OF the p~olicyholder TO accumulate further
at his expense.
1t should be your duty to minimize in
every way possible their 1.-THE insurance
companies1 influence in the finaD cial world.
The way to do that is to stop these accumu-
II would be impossible to prevent
he existing surplus from increasing. The
alone will add enormously.
HURRY THE NEW ELECTIONS.
Mr.. Untermyer had five changes to
in the proposed bills. OF them he
said:
The first suggestion we desire to make with
to these bills Is that propoed Senate
bill No. $50. entitled A Act Providing for
the Election OF Directors in Mutual Life In
surance Corporations" shall be separately
dealt with by the Legislature in priority TO
the general body OF legislation affecting the
conduct of the business. That bill pro-
vides In substanc e. as Its title indicates, for
postponement OF elections of directors
until November is and for the can cellation
of all outstanding proxies.
We respectfully protest against retaining
the present board Of directors, practically
their term until November Is.
We do not believe that the scheme outlined
In the main bill for the election of directors
requires that the Official lives OF the existing
boards should be extended for any such len 9Th
of time. 1t means an added tenure OF office
for seven months for the directors of the