New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1875-05-22
EFFECTS OF THE LAW IN CERTAIN CASES


THE SURPLUS LAW OBJECTED TO ON THE GROUND
THAT IT MAKES THE ORGANIZATION OF COM
PANIEs sECURK-A LAW WHICH Is NEITHER
WHOLLY GOOD NOR WHOLLY BAp.
TO tie Editor OF The Tribune.
SIR: If what you say is true, You prove too
much! II
twas and is recognized that the burning Of few
blocks " buildings In the dry goods quarter of New YORK
would produce complete bankruptcy with large number o
our companies as did the fire Of Chicago
then il ia perfectly obvious that such companies are ut
ery unworthy do business in this metropolis; and if
there arc such they the very that would he
likely TO take unworthy advantage OF the Surplus law
which YOU advocate; companies with small aggregate
assets having large percentage OF surplus 10 capital
For example: Total assets, 100000; capital, Sl3o
600 total liabilities aside from capital, 100000; leaving
surplus OF S2OOOOO One-half Of this under the new
law. il made q Especial reserve" and deposited at
Albany That makes the organization OF the company
and The official seats Of its MANAGERS secure IL may Ihe
enter into any Of reckless underwriting which ~
chooses fulfilling the largest extent your assertion
quoted above It may pile up the , ,a, ana De ,o 80 utterly
,vnuId not nay ten the dollar but the SlOOOOO
which il sent 20 Albany and the reinsurance iund re-
ain "a new capta and assets which IL may repeat
thc same experiment, rabing III great income ana H
nshng adequate security TO us polcy Holders NO
one can study this Surplus Jaw carefully without See
Ing that this OF it, defects d temptation To recA
less underwriting by companies Of snF, callner ,
Your assertion. far as II incudes Ihe Iaiee CON-
panles is altogether inapplicabe. Ever slice me
Chicago fire the larger aud better managed spnPahi,s
have been arranging their business with the possible re-
currence Of such disasters in view And to-day TWO or
three hundred millions may burn IN any one OF the large
cities this continent and the great companies VIII not
De bankruptcd.
Again you in error when you say that
accumulation ot this fuDd which - 10 Keep the CON-
pany on it, chiefly ia consequence OF the law Itself
This denial cannot better illustrate than by quoting
the most eminent company th9t has thus iar adopted
the law. That company has assets $500 20, OF
which $iO76Ol surplus: Under the statutes of New
company would compelled to Increase It's surplus TO
nearly million OF dollars before could remove any
portion from the reach OF any loss claimant Under the
new law il has set apart nearly oneha Of that surplus
a snecal reserve" where no loss claimant touch IT,
The accumulation Of the fund which is To keep the
pany on feet is not in consequence OF the law which
yOu advocate. ....-., -,
means exhaustive Take the first example given above.
To-day under the old law the company has 800 900
assets 10 meet liabilities Of all sorts they may arise.
Tomorrow under the law, 100 900 will be Gent to
Albany and great cOnhagratiOn arises, its assets,
far az current poicy-hoders concerned dmin-
ished by Just much That Is brief statement of
the case.
This law neither wholly good wholly bad II has
Its advantages and It's bemshcs aud the question in
which the general public Ia Interested IL whether the
ontwcghs the other and II So which has the preponder,
ance Admitting nearly every specific good which has
been claimed for this law have several occasions at
tempted and successfully "a believe, to demonstrate
that, on the whole, the peponderance Is against 1t. NJ
Gee York, Nay l. 1915.