The daily worker. [volume] (Chicago, Ill.) 1924-1958, 1932-06-29
COMPANIES RISK
INSURANCE FUND
Biggest Firms Totter;
Investments Fail

CONTINUED FROM PAGE ONE
crisis, began to take their unearned
premium reserve, the money stored
up to pay the policy holders when
policies came due, and gambled with
it. In many cases, they took not
only this money, which the compan-
les held in trust for the policy own
ers, but they took also parts of the
capital stock, and gambled with that.
Capital stock is legally a guarantee
of the payment Of the insurance pol
icies when they come due.
The Republican committee states
that 81 large insurance companies in
New York have, at the end of 1880 an
average of 57.2 per cent of their to-
tai assets invested in stoek-and
stock was then going down and has
been going down ever since.
The Land Mortgage Gamble.
From workers in the Office of In
suranee Companies. the Daily Worker
learns more than the Republican
committee admits. Official data
available to these reporters shows
that % large life insurance compan-
les hold s2,438,OOO,OoO in railroad
bonds. Now the Is leading industrial
stocks have fallen in 1882 to just
Is per cent Of their price in 1929, ac-
cording to the New York Times in
dex. Blu the Is leading railroad
stocks have fallen to IL per cent of
the 1929 level.
AS for mortgages on land, which
is part of insurance assets consid-
cred safe by the Republican COM
nittee, and not even mentioned in
their warning, 100000 assets are
invested in mortgages, according to
the 18th Annual Convention Of the
Mortgage Bankers Association. 1880.
Forty life insurance companies hold
81 500, 100000 in farm mortgages Gus.
official figures, Dept of Agriculture
report on conditions in April, 1892.
But land values are collapsing, as
is admitted in the Yearbook of Ag-
riculture, 1882. And the Journal OF
Farm Economics says: (Jan., 1882
says: ct would seem that land val
ues had already been Debated, but
if prices continue to decline pro-
duction to be restricted, and land to
be thrown out of use, the end of the
decline in land values is not yet in
sight. In areas where land is thrown
out of use. farm values will disap-
pear. In the less productive areas,
the decline viii be very severe Lower
land values may prove of serious
consequence to many investors in
farm land mortgages In case Of
some institutions, this may be sum
cient to cause their insolvency.
Companies Are Lying"
Now what are the insurance COM
panies doing, in the face of this ca
tastrophe? They have been trying to
keep up profits, by gambling with the
policy holders money, and they have
been losing that gamble, and they
have been lying about it, so as to
draw still more money in the shape
of insurance premiums out OF the
suckers.
July will be difficult day for
the directors of the insurance COM
panies. On that date, the compan-
les are due to make their second an
nua1 statement Of conditions. On
Jan. LIST, the date of the last
statement, the companies sue
ceeded in covering up their real fin
ancial standing by representing the
value of the securities which they
were holding not on the basis of the
stock market quotations of Jan. 1st,
but on much higher level Of the pre-
vious July. The permission to beau
tify their statement by quoting ficti-
tious values was not given to the
companies by the millions and mil
lions of policy holders who have a
vital interest to know the truth but
rather by the federal authorities.
But this device leads to still more
difficulties for the directors of the
companies. On July LIST, they must
give another statement Of the pre-
sent value Of their holdings. Will they
be brave enough to show the present
valuation of their securities. which
will reveal drop in these assets Of
about so per cent below their Janu-
airy statement? Or will they once
more utilize the special protection of
the federal authorities in order to
continue making fictitious statements