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TABLE 1.-Comparison of securities placed privately with all corporate offerings, classified by main-industry group, 1934 to 1949, inclusive

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1 Including telephone, water, pipe-line, and street railway companies.

? Excluding investment companies.

First 6 months.

Source: Financial Analysis Section, Securities and Exchange Commission, July 28, 1949.

TABLE A.-Corporate bonds placed privately-Percent of total amount purchased by various investors

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1 Figures for the years 1940-43 were taken from work sheets prepared some years ago and the distribution apparently did not cover a small number of issues where identity of purchasers was unknown. This probably does not seriously impair the use of the figures, however.

Source: Section of Financial Analysis, Securities and Exchange Commission, July 28, 1949.

TABLE 2.-Corporate bonds1 placed privately and offered publicly, 1934-49

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Source: Financial Analysis Section, Securities and Exchange Commission, July 28, 1949.

TABLE 3.-All private placements classified by type of security, 1934 to 1949

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[Source: Financial Analysis Section, Securities and Exchange Commission July 28, 1949.

TABLE 4.—All private placements classified by major industry, 1934 to 1949

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1 Includes issues of telephone, water, pipe line, and street railway companies as well as gas and electric companies.


Source: Financial Analysis Section, Securities and Exchange Commission, July 28, 1949.

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The CHAIRMAN. You state in your formal statement, in the first statement that you read, that the life-insurance companies, so far as you know, have not in any way sought to secure legislative exemption from the effects of the antitrust laws of the United States.

Mr. LINCOLN. I certainly do.

The CHAIRMAN. Are you familiar-excuse me, I did not mean to to interrupt you.

Mr. LINCOLN. Go ahead.

The CHAIRMAN. Are you familiar with Public Law 15 of the Seventy-ninth Congress?

Mr. LINCOLN. Certainly, I lived with it.
The CHAIRMAN. I beg your pardon.

Mr. LINCOLN. I lived with it.

The CHAIRMAN. Of course, you know that section 2 says

the business of insurance

that takes in property as well as life insurance—

of every person engaged therein shall be subject to the laws of the several States which relate to the regulation or taxation of such business.

Then it goes on to say that

the Clayton Act and the Sherman Act shall be applicable to the business of insurance to the extent that such business is not regulated by State law.


The CHAIRMAN. Did the Association of Life Insurance Presidents advocate this bill?

Mr. LINCOLN. Well, I do not know what you mean by "advocate." There was no effort made on the part of any life insurance company of which I had the least knowledge to secure any exemption from the antitrust laws by that or any other statute.

The CHAIRMAN. Of course, this bill does not limit itself to property insurance companies.

Mr. LINCOLN. It does not. I want to emphasize and reemphasize that in the life insurance business there was not any thought that the antitrust laws were being violated before Public Law 15 or before the SEUA decision, and there was no effort to secure eexemption, and there is not today.

The CHAIRMAN. Of course, I do not state there was any violation of the antitrust laws, Mr. Lincoln. That is furthest from my mind. Mr. LINCOLN. I want to emphasize to you, because I think you have got the wrong angle, that the life-insurance companies did not seek at any time an exemption, and are not seeking any today.

The CHAIRMAN. Do you speak for the Metropolitan or all of them? Mr. LINCOLN. I think I can speak rather more widely than for the Metropolitan.

The CHAIRMAN. I beg your pardon?

Mr. LINCOLN. I think I can speak a little more widely than for the Metropolitan, and I do not know of any company which has sought any time an exemption, and are not seeking any today.

or elsewhere.

The CHAIRMAN. Of course, this does exempt the life insurance companies by declaring a moratorium, as well as property-insurance companies.

Mr. LINCOLN. It exempts them if they need any exemption, but they were not violating the law before, in my opinion, and there was no occasion to ask for an exemption.

The CHAIRMAN. You do not want the law to be changed so as to take life insurace companies out of Public Law 15, do you?

Mr. LINCOLN. I do not know what the effect of that would be otherwise, but certainly I am saying again, and I want it thoroughly in the record, that there is no desire on the part of any life-insurance company that I know of to have any exemption from the Sherman law, the Clayton law, the Robinson-Patman law, or anything else.

The CHAIRMAN. Mr. Lincoln, in your statement on page 1-the second statement you offered-we find the following at the end of the first paragraph:

The inherent character and quality of investments should not be confused with the method of acquisition.

Do you not think that the method of acquisition is very important? Mr. LINCOLN. I cannot see why. If we are going to invest the reserves belonging to our policyholders, and we find that we can go out here and buy one-I will put it the other way-that an investment banker is coming in and making an offering of one, and there was a public offering over here, I do not see that it makes the slightest difference for our investment of our policyholders' money which channel it comes through.

The CHAIRMAN. Does not the difference involve publicity as to the nature and details of the loan?

Mr. LINCOLN. If there is any occasion to have any. What occasion is there to have any? The publicity, if I understand you correctly, would relate back to the supposed necessity of creating the Securities and Exchange Commission, and in that case that was designed specifically, under the President's guidance, I am sure, to protect the small investor, and I think he evolved a phrase, if I remember it at that time was it not something on the order of caveat emptor?-and he shifted it around-my Latin has gone from me now-but he said, "Let the seller beware."

Mr. KEATING. Caveat vendor.

Mr. LINCOLN. Thank you for your Latin. That was out of Mr. Roosevelt's own mouth at the time of that SEC business.

Mr. KEATING. Well, I will withdraw it then. [Laughter.]

Mr. LINCOLN. Do we have the whole colloquy stricken out, Mr. Chairman?

The CHAIRMAN. No; we have not, not by any means.

Mr. LINCOLN. All right. We will have to put up with that.

The CHAIRMAN. The SEC has been avoided, and is avoided, and the Registration Act is avoided by private placements of huge amounts of loans.

Mr. LINCOLN. I do not think "avoided" is a proper word. There is no occasion under the theory of the SEC law to have these loans registered.

The CHAIRMAN. There is no need then to resort to the Registration Act?

Mr. LINCOLN. None whatever.

The CHAIRMAN. And, therefore, efforts are made, as far as possible, to place these loans privately so as to be no need to go to the Securities and Exchange Commission.

Mr. LINCOLN. Well, I am still thinking of the people that the SEC was established to protect, and they certainly are not the large investors. The large investors are well able to take care of themselves; that is all the SEC was there for.

The CHAIRMAN. Do you not think that, where loans of these huge amounts are made, the public should know something about the details of those loans?

Mr. LINCOLN. Well, I think that is entirely different from the question as to whether they ought to be channeled through the SEC. I do not see that there is any

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