Evening star., 1938-05-03

49, ever efforts at CO.
operation usually
. have been estab-
p.,,aI lis n d between
business and gov
ernment. In this particular case the
President asks that powers be con-
ferred on the Securities and Exchange
Commission to conduct the investiga-
ton and it so happens that John w.
Hanes, member of the S. E. c., was the
prime mover in getting the manifesto
of the Is men signed last week. It
seems incredible that he should have
known the President was planning a
move Of this sort, and it may well be
that this is but another example of
the right hand not knowing what the
left is doing in the Roosevelt admin
tstration. The Presidents exact words
IN his message to Congress were:
"The tremendous investment funds
controlled by our great insurance COM
panies have certain kinship to in
vestment trusts, in that these COM
panies invest as trustees the savings
of millions Of our people. The Securi-
ties and Exchange Commission should
be authorized to make an investiga-
ton Of the facts relating to these
investments with particular relation
to their use as an instrument of eco
nomic power"
Goal Not Disclosed.
For more than two years there have
been rumors hereabouts of attempts by
New Dealers to get congressional
investigation started on insurance
companies. Just what they hope to
accomplish is not clear and 1t may be
that the New Deal feels that any
group Of institutions with $4,000 000,-
900 of assets should not be permitted
to exist unless it is within the clutches
Of the political administration here
Mr.. Roosevelt's principal argument in
his message was that concentration Of
economic power should be reduced, II
not eliminated altogether. It is true
that the insurance companies have
large sums to invest, but their size
is big advantage to the policyholder,
because If investments in certain
field should drop in value, it does not
as q rule affect the portfolios of other
investments This diversity has been
. big feature of life insurance COM
panies.
There is one possibility that may
rise out Of political tinkering with
insurance companies. 1t relates to the
forcing of more Government securities
on the insurance companies or at
least preventing them from exercising
any veto on reckless issuance by the
Government Of more and more Sc
curities.
Bond Holdings Climb.
The banks already have higher
proportion of their deposits invested
in Government securities, and the
insurance companies also show
higher proportion of their assets in
Government bonds than at any time
In their history.
Back in 1929 the investments Of the
- companies which do virtually all the
insurance business Of the country
contained only about per cent of
their total assets in Government bonds.
But on January l, 1888, the per-
centage Of Government securities to
the total assets had gone up to 1872
per cent. 1t now amounts to about
$4,416, 100000 - an unprecedented
amount as well as percentage.
Cash held by the insurance COM
panies unable to find safe investment
IS higher today than ever It was
only $l17,o00,00o in 1929, but today
about S625,o00,000 in cash Is lying
idle in the insurance companies wait
ing for some way to be properly
invested.
Naturally this idleness irks the ad-
ministration, which would like, no
doubt, to see the insurance companies |
abandon their conservative investing
policies and join in the ballyhoo of
pump-priming engaged in by the
politicians who have no regard, as |
rule. for other peoples money when |
1t comes to spending programs.
Railroad Investments Grow.
1t is obvious, too, that life insur-
ance companies have to be consulted
on many other things the admins
tration is doing. Thus on January /,
1888, the 40 insurance companies had
$3,134,00o,000, or 1873 per cent of
their total assets, In railroads, and
$2,826, 100000, or 11.9 per cent of their
assets, in other public utilities. This
compares with s2,848, 100000, or 1T
per cent of total assets, invested in
railroads, and $1,450, ,000, 900, or 9
per cent Of total assets, in other public
utilities in 1929.
Here. then, on the matter Of rail-
roads, public utilities and purchase of
Government securities, a group Of
private citizens are in q position to
exercise an independent judgment
In investing funds. This Is not to the
liking of the New Deal, which wants
to have concentration of political
power. The investigation method is
the favorite way to get new legislation
because the inquiries usually are con-
Quoted In biased and undertaking
fashion for headline purposes and
political combat.
The insurance companies have In
the last couple years been buying
privately WnOle uOIatlOnS OF ISOucc VI
industrial companies, and this has IN
some instances made registration be-
fore the s. e. c. unnecessary. This
has been q source Of irritation to the
New Dealers who want to control not
. part of the capital market, but all
Of it. As q matter Of fact, it ID be-
lieved the insurance companies have
no special desire to buy securities at
private sales, but are often forced to
do 30 in order to invest their funds
in industrial companies bonds that
yield q good interest rate. Practically
none of the life insurance company
REMEMBER the NAME!-