The inquiries into life insurance by Congressional committees were those of the Judiciary Committee's Subcommittee on Power Monopoly, the chairman of which was Emanuel Celler of Brooklyn, and the Joint Committee on the Economic Report, the chairman of which was Senator Joseph C. O'Mahoney of Wyoming. Both inquiries quickly assumed fact-finding aspects. Nothing developed at either hearing of a nature critical to the institution of life insurance or its operations.
The questions of Chairman Celler were largely based on whether certain companies had grown too large and influential for the good of the national economy or of life insurance itself; whether federal supervision should replace state insurance supervision; and whether small companies or those lately entering the field were unable to progress satisfactorily either in competition for new production of business or in their fund-lending activities because of the size and power and influence of the larger companies with which they would compete. Witnesses represented large, medium-sized, and small companies. Testimony was that there was no monopoly in life insurance; that the so-called giant companies were losing their percentage leadership in production of new business; and that the life insurance business was now being operated to a substantial extent on a decentralized basis even with the very large companies. It was also testified that since 1900 approximately 250 new companies had entered the field — 100 of them in the last decade — and none had been a failure. Many avenues were open for lending activities of small companies, witnesses said. None of the executives favored federal supervision of insurance if it were to replace state supervision, all of them praising present state methods of supervising insurance companies.
Before its hearings, the O'Mahoney committee sent out a large number of questions asking life companies for a great deal of detailed information. The questionnaires were largely based on whether shortage of equity capital was temporary or permanent; whether the financial door was being closed on independent and small business; whether large financial institutions had an advantage over small enterprises because of size and influence; and whether savings were being channeled to an increasing degree through life insurance companies, thus diminishing the supply of equity capital as such. The executive officers of numerous leading life companies came to Washington and testified before the O'Mahoney committee that the reasons for the shortage of equity capital were due to many factors including the government's 'easy-money policy,' which has kept interest rates low; the heavy taxation of business; and inflation and various currents in the political stream which had weakened confidence of investors.
None of the life insurance company officers, including the small companies, thought that the life companies were too large nor that their competition was damaging to small companies. All denied that lending operations of life companies, whether through directly negotiated loans or other financing, gave them any management in operation of business corporations. They testified they did not want that power.
The questions of Chairman Celler were largely based on whether certain companies had grown too large and influential for the good of the national economy or of life insurance itself; whether federal supervision should replace state insurance supervision; and whether small companies or those lately entering the field were unable to progress satisfactorily either in competition for new production of business or in their fund-lending activities because of the size and power and influence of the larger companies with which they would compete. Witnesses represented large, medium-sized, and small companies. Testimony was that there was no monopoly in life insurance; that the so-called giant companies were losing their percentage leadership in production of new business; and that the life insurance business was now being operated to a substantial extent on a decentralized basis even with the very large companies. It was also testified that since 1900 approximately 250 new companies had entered the field — 100 of them in the last decade — and none had been a failure. Many avenues were open for lending activities of small companies, witnesses said. None of the executives favored federal supervision of insurance if it were to replace state supervision, all of them praising present state methods of supervising insurance companies.
Before its hearings, the O'Mahoney committee sent out a large number of questions asking life companies for a great deal of detailed information. The questionnaires were largely based on whether shortage of equity capital was temporary or permanent; whether the financial door was being closed on independent and small business; whether large financial institutions had an advantage over small enterprises because of size and influence; and whether savings were being channeled to an increasing degree through life insurance companies, thus diminishing the supply of equity capital as such. The executive officers of numerous leading life companies came to Washington and testified before the O'Mahoney committee that the reasons for the shortage of equity capital were due to many factors including the government's 'easy-money policy,' which has kept interest rates low; the heavy taxation of business; and inflation and various currents in the political stream which had weakened confidence of investors.
None of the life insurance company officers, including the small companies, thought that the life companies were too large nor that their competition was damaging to small companies. All denied that lending operations of life companies, whether through directly negotiated loans or other financing, gave them any management in operation of business corporations. They testified they did not want that power.
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