PRESENT PROBLEMS IN INSURANCE 247 



attempt to do two or more kinds of business under the same charter 

 and over the names of the same set of officers. It is conceivable 

 that the same set of men may be able to undertake successfully 

 different branches of insurance at the same time. It has been 

 done. If it is to be continued in the future, good public policy, as 

 well as the best interests of the insured, demands that the different 

 branches of the business shall be managed by different companies, 

 operating under separate charters, each legally restricted to one 

 branch of the business, each responsible to the proper supervisory 

 authorities, and each absolutely independent as a financial institution. 

 This point should commend itself to the legislatures of the various 

 states in which new charters are sought. On the part of the older 

 insurance companies the mixing of functions on the basis of express 

 charter provisions practically does not exist. Because of their enor- 

 mous financial transactions these companies have, however, become 

 to some extent affiliated with institutions organized for other than 

 insurance purposes. Business affiliations of this nature are extremely 

 common in the industrial world and constitute one of the distinct 

 characteristics of modern economic development. When such 

 affiliations of insurance companies arise naturally out of the neces- 

 sity of investing great sums of money in the most profitable manner, 

 consistent with security, and extend no farther, no valid criticisms 

 can be raised against them. When, however, these affiliations of 

 insurance companies become tantamount to the assumption of 

 banking, transportation, manufacturing, or other powers, the inter- 

 ests of policy-holders as well as public morality demand a peremptory 

 abrogation of such powers and a complete separation of the affiliated 

 institutions. By adding the columns in Wolfe's Investment Directory 

 of Insurance Companies for 1904, any one may ascertain that the 

 insurance companies listed in the Directory own a total of about 

 $21,000,000 par value of preferred, and $81,500,000 par value of 

 common railway stock. They also own nearly $26,500,000 par 

 value of miscellaneous industrial stocks, of which nearly $6,000,000 

 par value are preferred, and over $20,000,000 common. Disregard- 

 ing that part of the holdings of preferred shares which represents 

 voting-powers, the exact extent of which cannot be readily deter- 

 mined, the common shares represent 100,000 votes, assuming that 

 all are $100 shares, in the election of officers and directorates of 

 railway and industrial companies. To this extent the insurance 

 companies concerned operate railway and manufacturing establish- 

 ments. That this power is actually exercised, and occasionally with 

 czar-like authority, can be easily confirmed by a visit to Wall Street. 

 It may be argued that, having invested their funds in stocks carrying 

 a franchise power, the insurance companies must participate in the 

 management of the establishments represented by the shares held 



