248 INSURANCE 



by them in order to protect their own interests through the appoint- 

 ment of competent officials. It is a sufficient and final answer to 

 say that no insurance company has a right to touch the shares of a 

 company which requires the wisdom and experience of the insurance 

 officials for its safe conduct. Shares of stock issued by a company 

 with the least taint of a suspicion of incompetent or dishonest man- 

 agement condemn themselves as investments for insurance trust 

 funds. There is positive, direct, and immediate danger in unre- 

 stricted insurance investments in the common shares of railway 

 and industrial companies. Preferred shares may be as good as bonds 

 or as uncertain as inferior common shares, depending upon the 

 particulars of the case. It should be added, however, that the 

 moderate market fluctuations of shares, unless the shares were pur- 

 chased at too high a price, do not necessarily constitute valid objec- 

 tions to the investments in such shares, because the insurance com- 

 pany is interested not only in the security of the principal, but also 

 in the certainty and continuity of the interest or dividends, and the 

 rate of interest earned is not necessarily affected by moderate 

 variations in the market price of securities. Investments in railway 

 and other first-class bonds do not offer the objections inherent in 

 investments in stocks for the reason that bondholders do not gen- 

 erally have anything to do with the management of the properties 

 upon which the bonds are issued. The quiet influences which large 

 bondholders may exert can scarcely be made the object of unfavor- 

 able criticism from the point of view of the policy-holder. 



Before dismissing the question of the affiliation of insurance 

 companies with other kinds of business, it is desired to direct atten- 

 tion towards the use of names in connection with some insurance 

 companies, notably some of the newer or weaker companies. It is 

 well known in insurance circles that men will permit companies to 

 use their names as officers and directors when the man who carries 

 that name may be absolutely ignorant of both the nature of the 

 insurance business and of the standing of the company which the 

 public is made to believe he directs. Long lists of " advisers " and 

 ' councilors " who, in a quiet way, become interested in the com- 

 pany on some " ground-floor plan " are published and scattered 

 broadcast with the view of securing as policy-holders persons who 

 will be influenced by the fact that certain names appear in the list 

 of officers, councilors, or advisers. Sometimes these decorative 

 persons are promised financial rewards, abstracted as robber-tolls 

 from the premium payments of more honest policy-holders. All this 

 wretched business is too contemptible to deserve more attention in 

 this place beyond the exhortation that every citizen should do his 

 utmost to secure legislation which will forever banish the dishonest 

 insurance prospectus and the dishonest use of names in connection 



