New-York tribune., 1920-12-12
HO1u Insurance Men Incest
Money Of Policyholders
Metropolitan Life President Explains Method of
Benefting Industry and Home Building
by Using Premiums to the Best Advantage

shortage Of all kinda Of buildings, sew
eral obstacles were found in the search
for loans The surtaxes on income
caused estates and individuals to call
existing mortgages for payment for the
purpose Of reinvest'rg tho funds in
tax-exempt securities or those yield
ing q high return and 70 refuse to
ritcant that the insurance company
which is the largest investor in New
York City mortgages has not re-
fused here or elsewhere = single appli-
cation with adequate security on h0ua-
ing enterprises, and has loaned this
year, and agreed to loan On mort
cages, $80,000,000. And can anybody
say that the life insurance companies
should be the only lenders on bond
that the tax laws have cut out of the
market the private investor and the
managers Of estates; nor that there are
IN the market huge amounts of tax
exempt investments Of local govern
ment bodies.
And there is tho matter Of farm
Icons. Dwellers in cities have had di-
rect benefit in the matter Of lower
food costs and would suffer IL agri-
cultural development were curtailed.
The life companies are called upon for
shese loans and have over $1,000, ,O00,-
600 SO invested-15 per cent of their
assets; although in this field they have
to submit to the competition Of the
Federal government which exempts
mortgages made under it's system from
taxation. The history Of farm loans is
very creditable to the life companies
Mortgage Investments
AS to the total mortgage invest
ments, In 1870 nearly 40 per rent
of the assets Of the thifty-nine COM
par les was on bond and mortgage; In
1875, SO per cent; from 1880 to 1895,
about 40 per cent, end last year they
we're over 80 per cent. The end of this
year will probably see this percentage
increased; for the increase Of mort
gage loans by tho thirty-nine COM
nanles in 1920 to the end Of October
amounts to $232.739,388. Thus to-day
of $2082. .836,843 inve ted on bond and
mortgage, about equally divided be-
tween farms and cities, and have made
commitments for many millions more
one company alone having promised
nearly S50,000,000 N loans not yet
closed.
The last principle mentioned to be
discussed is the distribution of invest
ment in localities where policyholder
reside. This problem has been up in
various forms for several years. The
claim has been made that life insur-
ance companies should be compelled by
portion Of the policy reserves upon
lives in the respective states in GER
tain designated classes of securities
Of or in those states or political divi-
sions thereof. One state passed such
law. The consequence was that the
most important companies withdrew
from the state and have never re-
turned; another consequence was the
rise in the rate of interest on mort
cages in the state because Of the with
drawal Of company loans.
Agitation for Legislation
The agitation for that kind Of legis-
lation has never ceased, and even in
the enlightened State of New York
something along that line has been
proposed-as, for instance, compelling
loans on bond and mortgage in some
proportion to the assets. Much can be
forgiven people who have the RESPONSE
bility Of meeting acute housing de-
fciency. But they must think things
out The fact is that the life insur-
ance companies doing business in this
state have about so per cent Of their
New York reserves invested in New
York real estate mortgages and real
estate Such law passed in New York
would lead to reta'iatory legislation
The ultimate result would be the
diminution instead Of the increase of
mortgage loans in the state.
The fact is that there is no obltge-
ton upon the companies to the vari-
Gus states in matter OF investments.
The right to do business Is purchased
by the payment Of taxes and license
fees and the subiection to state super
vision. The obligation of the COM
panies is to their policyholders in the
resnective states. The way to con-
duct an insurance company Is to meet
the reasonable, intelligent, informed
desires of its policyholders. In re-
gard to this subject, what is the real
interest Of the policy-holder? 1t Is
to get the best returns out of safe in
vestments. Safety first, income next
Wherever the returns are highest on
sound securities there should the in
vestment be made irrespective Of 10.
cality.
Would Defeat Object
But. given securities Of equal value
and return, it is right that policy.
holders should have their localities
benefited. This Is, think, according
TO tne investment pan OF the cOmpan'
les. 1t is dictated by self-interest
Any attempt to dictate by legislation
is sure to defeat its object.
What the companies have done Is tc
invest their funds throughout tho coun.
try where funds were needed, as indi-
Gated in part by the rate Of interest
obtainable. Two things were accom-.
pished thereby which benefited policy.
holders; first, better rate Of inter.
! est was obtained, and second. tho par.
TALLY undeveioped parts Of tho coun-
try were helped along in their prog
ress. The states are being welded
more and more into nation. They
are getting closer together by in.
creased Interstate Investments, neare,
together by the diminishing of con
trasts in respect to capital and con
sequent improvement in business anc
living conditions.
Buying Pearl Shell
In Australia Urged