Frenzied Finance, Vol. 1: The Crime of Amalgamated

by Thomas William Lawson

Very respectfully yours,

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I replied: The transaction in regard to the New York Security Company and the New Hampshire Traction stocks was exactly as I set it forth. I can imagine no one but an absolute idiot who would dare to set it forth unless he knew he was dealing with facts.

Your high position in the church should, in my opinion, peculiarly fit you to answer fairly your question, "Is the New York Life telling a falsehood when it states that not a dollar of its assets is in stocks of any kind?" when I unqualifiedly state the fact that the New York Life owned the millions of the New York Security Company's stock; that it paid $150 a share for them and sold them to a syndicate of its own directors at $800 per share, and that the stock afterward sold at over $1,300 per share, and still afterward dropped to less than $600 per share. I did not wish to be unfair to the New York Life, or I should have stated, what I shall endeavor to show before my story is ended, that at the time the New York Life parted with these shares to their own directors at $800 per share they were actually worth and could have been sold for hundreds of dollars per share more.

THE HONESTY OF THE ONE MAN

At this the big insurance companies uncovered their guns, and soon the air, the newspapers, and my mail were full of underwriting explosions. It was necessary then to line up my forces and to go at the attack seriously. So, having carefully thought out a campaign which my knowledge of the men whom I was antagonizing taught me would bring results, I began, in December, as follows:

When I began to write "Frenzied Finance" I specifically stated that I should not concern myself with men, but with principles. I held that to put an end to the plundering of the people required more than the denunciation of individual criminals; that the real peril lay in the financial device through which the plundering was done and the "machine" developed for their operation. The "machine" is the tremendous correlation of financial institutions and forces that I call the "System," and the most potent factor in the "System" is the life insurance combine—the three great insurance companies, the New York Life, Mutual Life, and Equitable, with their billion of assets and the brimming stream of gold flowing daily into their coffers. That I should have to discuss the relation between the "System" and these great institutions was inevitable; but, knowing how vitally interested the public is in the preservation of the gigantic structures its savings have erected, I had thought to treat this phase of my subject later on, when my readers should be absolutely convinced by what had preceded it of the honesty and fairness of my purpose. Moreover, it did not seem possible to touch on life insurance conditions without involving the men who direct the three great companies, and whom policy-holders and the people at large have been taught to regard as men of wellnigh miraculous sagacity, integrity, and beneficence. With these men I have had none but the pleasantest relations, and determined as I am on the performance of my task, I go about it with the reluctance a surgeon feels when, in order to save a friend's life, he must amputate his limb.

A contingency has now arisen which compels me to depart from my rule and to discuss much more frankly than I had purposed at this juncture, the New York Life Insurance Company, the system which controls it, and its president, John A. McCall, the "System's" representative.

In reply to the inquiries of an anxious policy-holder, who had taken alarm at my statement that the funds of these great corporations were under the control of the "System," I stated in the October issue of Everybody's Magazine that the New York Life was, as well as its so-called competitors, the Equitable and the Mutual, as much a participant in the frenzied speculation of the period as were the plunging Wall Street stock gamblers; but in giving an illustration of its methods (the New York Security and Trust Company and the New Hampshire Traction Company) I selected a case which would not unnecessarily alarm nervous people, for the transaction showed an enormous profit as the result of a wild stock plunge, instead of an enormous loss—some of the New York Life's other deals were much less fortunate. When I stated that the New York Life disposed of its interest in the Security Trust Company to its directors for four millions of dollars, which represented a gain of over $3,000,000 on its original investment, I was careful not to state that the shares for which they paid $800 each were worth at the time $1,300 each, or $7,000,000 for what was sold for $4,000,000—particularly careful to state that they were afterward worth this additional amount.

Policy-holders in the three great life-insurance companies may argue: "The man who is known to us policy-holders as the real head of the New York Life is John A. McCall, its president. All that you may say about the 'System's' votaries being in control may be so, but we depend on the integrity and the character of this one man to protect our interests. He is our representative, not the 'System's,' and our savings are surely safe in his strong hands."