The Ypsilanti daily press. (Ypsilanti, Mich.) 1928-1962, 1941-03-14

d sen. " MhnOHtN est - AAONSt
chief financial
adviser 10 its insurance section,
following a study Of the life under
writer's investment policies. The
SEC didn't give it out directly. but
turned it over TO Chairman O'Ma-
honey. who published It. In doing
so he said he didn't necessarily in
dorse the Gcsell-Howe pairs opin-
ions. For that matter, Chairman
Frank of the SEC said that he
didn't either
The nub Of the report was that
the insurance concerns scoop in an
enormous amount Of money in pre-
miums and are so cautions In in
vesting il that virtually it's bottled
up, so far as ordinary business is
concerned, thus minimizing our
commercial and industrial activity.
Furthermore. it's pointed out, the
super gilt-edged class of securities,
which the insurance arrangements
confne their investments to, pay
very low interest rates; their in
comes would be larger II they
weren't so particular.
It would be better for all con-
cerned, Counsel Gesell and Adviser
Howe argue, II the companies
would buy common stocks in rea-
sonabiy safe corporations instead
Of combining themselves to bonds
and mortgages, under which they
can foreclose if they have to. abb
solutely guaranteeing themselves
against any loss whatever.
Guarantees Desirable
Most OF the legislators on Capt.
toll Hill, with whom I've talked.
take the position that absolute
guarantees are just what life in
surance companies ought to re-
ouire. II any business on earth
should be loss-proof. contend these
lawmakers, it's the life insurance
business.
why, II big returns are the
main consideration" one solon re-
marked to me, big returns are
possible from crap-shooting."
III a man acquires something
substantial for 81 he spends" said
another, that's an investment.
But II he bets it on a horse race,
it's a speculation. I don't think life
insurance companies ought to be
spectators.
1.-THE fact is" commented a
third, that we seem TO have gone
nutty on the subject of the desir-
ability Of circulating money. Our
whole system (of taxation, in par
ticular) aims at the penaliZation of
the chap who saves anything. The
theory seems to be that it's his
duty to spend his last cent as fast
as he takes il in, because in that
way the whole countryu be pros
porous.
"Dyou remember" he continued,
"the old grasshopper-and-ant IA
BILE?
THE grasshopper ate everything
UP as he went along. The ant piled
up an accumulation. When winter
came the ant was all o. X. But the
grasshopper was up against it.
Initiate that ant our fathers
and mothers and grandparents ad-
vised US. Don't be an improvident
fool like the grasshopper
To-day we glorify the grass
hopper as grand, public spirited
insect"
It's to be noted that Senator
O'Mahoney. whose economic quiz
had all the country's big insurance
men before it, as witnesses, ahead
Of Counsel Gesells and Adviser
Howe's study, says they came
through it in pretty good shape"
MELONS Advice
Common stocks Just before the
end Of the last boom the late Andy
Mellon. then treasury secretary.
was quoted in the press as advising
folk 10 buy bonds Why bonds ?"
newspapermen asked him. oh" he
answered carelessly. there's a ire
mendous demand for stocks now.
which makes EN- expensive. Bonds
are rather low, correspondingly;
they don't yield the immediate re-
turns that stocks, with their rising
prices DO But good bonds are a
pretty safe investment"
Then the boom popped. Panic
was rampant. At that juncture !
met a friend Of mine, a middling
rich man. Knowing him very well.
1 asked him, How does this situa.
ton effect, not a mere Spectator
but a substantial capitalist Like
you ,"
II thank you" he replied. for