1. That the ratio of income earned on mortgage loans on real estate by all classes of Insurance Companies and banking institutions not only in the State of New York but throughout the United States has been greater by approximately 1 per cent and more stable and constant almost invariably than has been the rate of income earned on bonds, stocks and other securities of these institutions. Assuming the average annual return of earnings on all securities of the Companies to be 5 per cent year in and year out for the past 14 years, this means that the income from mortgage loans on real estate has been approximately 25 per cent greater than the income from other securities.

2. Nothwithstanding the greater earning power, stability and safety of such mortgage loans as investments, the Insurance Companies and the Banking Institutions, with the exception of the savings banks, have invested a far greater proportion of their resources in bonds and stocks than in mortgage loans on real estate.

3. There has been a general tendency on the part of both. the Life Insurance Companies and the banking institutions in the years from 1915 to 1919 (both inclusive) to decrease the proportion of their resources invested in mortgage loans and to correspondingly increase their investments in bonds, stocks and other securities.

4. The increase in the ratio of investments of insurance companies in United States bonds during the period of the war when these investments were necessary, resulted in a decrease in the investments in mortgage loans; in some instances there was also a decrease in the investments in bonds, stocks and other securities but not in anything like the proportion in which the investments on mortgage loans were decreased.

5. All classes of insurance companies of other States have invested on the average throughout this period of 14 years a far greater portion of their available resources in mortgage loans than have the Companies in New York State.

6. The Life Insurance Companies of New York State have invested proportionately more in mortgage loans in other States in relation to the insurance that they have outstanding

in those States than the Insurance Companies in other States have invested in mortgage loans in New York State in relation to the insurance that the latter have outstanding in the State of New York.

7. Some of the Insurance Companies have invested in mortgage loans a much smaller proportion of their resources than the average shown by all of the Companies combined, the investments of the Fire, Casualty, Fidelity, Surety and Marine Companies in particular being only a small fraction of the general average.

8. Several Life Insurance Companies have invested a greater ratio of their available resources in stocks than the average shown by the Life Insurance Companies as a group.

9. The low rate of income earned in the years 1919 and 1920 by some of the Fire, Casualty, Surety, Fidelty and Marine Insurance Companies on their investments in bonds, stocks and securities other than mortgage loans is due to extraordinary losses that were incurred in these years in the disposition through sale or otherwise of railroad, public utility and industrial and other securities of an apparently unstable and speculative investment value.

10. The Fire, Casualty, Public Liability, Fidelity, Surety and Marine Companies, especially in the State of New York, have invested as a rule a trifling fraction of their resources in mortgage loans and a negligible proportion of their invested assets as compared with the Life Insurance Companies and the banking institutions.

11. There has been a gradual tendency on the part of the Fire, Casualty, Public Liability, Fidelity and Surety Companies of New York State to decrease the ratio of their investments in mortgage loans until they are almost entirely excluded from their assets. This is not true to anything like the same extent of like Companies of other States.

12. The ratio of total resources of the savings banks of the State of New York invested in mortgage loans has been large and fairly constant. They increased slightly during the nine years from 1906 to 1914; but since then the tendency has been to slightly decrease the ratio of these investments. the decrease being, however, more than offset by the increased ratio of investments in United States securi

CONCLUSION NO. 1.

The ratio of income earned on mortgage loans by all classes of both insurance companies and banking institutions has been greater by approximately one per cent and most constant almost invariably than has been the rate of income earned on bonds and stocks.

Summary of Statistics in Support of Conclusion No. 1.-The percentages of income to investments in bonds and stocks and in mortgage loans, respectively, for the years 1906 and 1919, together with the average for the entire period, for the several groups of insurance companies and banking institutions, as reflected in the above-mentioned exhibits, are summarized, as follows:

The following tabulation shows in comparative form the percentages of income earned in investments in bonds and stocks and

* Period of only eleven years covered for Banking Institutions from 1909 to 1919, inclusive.

† Information not available for all of the Savings Banks, but compilation covers a group of five representative banks.

in mortgage loans by the more important life insurance companies of New York State for the years 1906 and 1919, and the averages for the intervening period of fourteen years, as per Exhibit "A", Part I, Schedule "B" (page 2):

The following is a tabulation showing, in comparative form, the percentage of income earned on investments in bonds and stocks and in mortgage loans by the more important life insurance companies of other states for the years 1906 and 1919, and the averages for the intervening period of fourteen years, as per Exhibit "A", Part I, Schedule "C" (pages 4 and 5):

Fire and Marine Insurance Companies of New York States.— Schedule "D" of Exhibit "J" gives a comparison in graphic form of the rate of income earned on bonds and stocks and on mortgage loans, respectively. The same general conditions are disclosed by this graph as those stated in the comments regarding Schedules "A", "B" and "C" of this exhibit but to even a greater degree. It shows that although in some instances the rate of income earned by the fire and marine insurance companies on mortgage loans has been greater than that earned by the life insurance companies, the rates have not been constant, indicating no doubt that the class of mortgage loans in which the fire and marine insurance companies have been investing is not as substantial or reliable as the mortgage loans of the life insurance companies. The line or curve of income earned on bonds and stocks reflects the most extraordinary conditions, showing earnings as high at 7.46 per cent in 1909, to as low as a loss of .55 per cent in 1917. This and similar variations tend to prove that the fire and marine insurance companies have invested their funds in rather speculative securities entailing at times extraordinary losses. This is particularly apparent in the year 1917 when all of their earnings on bonds and stocks were greatly exceeded by the losses sustained during that year.

Exhibit "R", Part II, shows that the percentage of income earned by the several companies on their investments in bonds and stocks was greater in some years than that earned on their investments in mortgage loans, viz.:

Continental Insurance Company-years 1909 to 1912, 1915, 1916 and 1918.

Fidelity-Phenix Fire Insurance Company-years 1908 to 1912, 1914 to 1916, and 1918.

Globe & Rutgers Fire Insurance Company-years 1911, 1913, 1915 and 1916.

Great American Insurance Company - years 1906, 1907, 1910, 1912, 1913, 1916 and 1917.

Home (Fire) Insurance Company-year 1906.

Below is a tabulation showing in comparative form the percentages of income earned on investments in bonds and stocks and in mortgage loans by the more important fire and marine insurance companies of New York State for the years 1906 and 1919, and the averages for the intervening period of fourteen years, as per Exhibit "A", Part I, Schedule "D":