Semi-weekly herald., 1913-01-16
Public Service Commi.sio. Law

Public Service Commission Law
The public service commission act
of New York provides that before a
certificate of incorporation can be is
sued to corporation, there must be
an appraisement by the public serv-
ice commission of the property, which
is to be exchanged for its capital
stock. II the capital is to be paid
IN money, it needs no appraisement,
but when it is to be paid in chips
and whetstones, it is vitality necessary
! to the public and to all investors in
the stocks and bonds of such COM
pany that the exact value of the prop
erty Of the corporation issuing such
stocks and bonds should be known. A
company having million dollars in
| property, therefore, cannot incorpor-
ate for three millions of dollars, but
is limited by the public service COM
mission to a capital of one million
dollars. The New York law has prov
en- most satisfactory, even to the cap
italistic class of that state. A bank
receiving an application for loan
upon stocks or bonds nc longer il
compelled to have private appraiser
estimate the value of the property Of
the company, but the bank knowing
from the certificate of incorporation
that the property of the company has
been appraised by disinterested state
officials, makes loans readily and al
most Immediately upon application.
of course the policy of fixing rea-
sonabe rates for the service of all
public utility corporations is as es-
sential as the right, which the SUI
preme court has said exists in the
railroad commission of this state, as
to passenger and freight rates upon
railroads.
Bank Guaranty Law
The platform of the Democratic
party in 1908, endorsed in 1910 and
repeated in 1912, provided for the en-
actment of bank guaranty law. Such
law was passed by the Eighteenth
General assembly to be referred to
the voters, but on account of defects
in the passage of the same, it was
found that its adoption would he il
legal and, therefore, was not submit
ted to the people.
can give no better reasons for the
enactment of this measure than the
following from my inaugural mes
sage of two years ago:
at has long been recognized that
it is the duty of a state to pass laws
regulating banks. The propriety of
such measures has even .been recog-
nized by the bankers themselves. The
strong banks are continually propos-
ing Legislative measures, to prevent
wildcat banking, and their efforts have
generally met with the approval of
all. These enactments have been held
valid on account of the great interest
which the state, and the people, have
in banks, and the fact that a panic
affects the value of all forms of prop
crty. 1t is important, however, not
to injure banking as it is a most
necessary means for the maintenance
of thriving business conditions. Ev-
cry one comedies that deposits should
be secure, and yet there are those
who contend that the very means nec-
essary to make them secure should
not be enacted.
OF all the guaranty laws which /
have read the one enacted in Texas,
in my Judgment, is the fairest to both
bankers and depositor. 1t requires the
bank to pay into a fund certain
small percentage upon its deposits,
this fund to be held for the payment
of the losses of banks that are COM
PEELED to close. The law, however,
gives to the bank the option of either
paying such percentage upon its de-
posits or Of guaranteeing it's own de-
posits by bond, to the amount of its
capital and surplus. In the latter
case it cannot be said that the solvent
bank is required to pay the losses of
the insolvent.
In Texas the banks are assessed
per cent of their average daily de-
posits for the first year, and one
fourth of l per cent for subsequent
years, until the fund reaches the sum
of $2,000,000 At this time the fund
is 100000 in cash, and bonds of
other banks guaranteeing their own
deposits to the amount of S5,50O,000
have been filed. While $4,000 in
the three and one-half years Of the
existence Of the law have been drawn
out of the fund to pay depositors of
failing banks, yet $81 900 have been
returned from the collection of assets
of such failing banks. This makes
the total loss to the fund of only $52.-
900 or $4,000 a year. or less than
one -thirtieth of one per cent per an
mum upon the total deposits.