Nay, thank me not, nor deem your triumph near.
The message bright
My glance conveys—'tis but—believe, me, dear—
Reflected light!
Mary Ainge De Vere.
LIFE INSURANCE.—II.
The companies organized under the general law of the State of New York are the mere creatures of that statute. Their organization, management, powers for good or evil, opportunities for mismanagement and corruption, are all to be traced directly to the law to which they owe their being. It will be necessary, therefore, for an intelligent understanding of the condition to which the business has come, to examine the act particularly. It is chapter 463 of the laws of 1853. It provides that any number of persons not less than thirteen may form a corporation for the purpose of making insurance on the lives of individuals, or against accidents, or on the health of persons, or on live stock. Such corporators are allowed to draw their own charter, and upon its approval by the Attorney General, that document has all the force of positive law. It is of course subject to the provisions of the act itself, but those provisions are so few and meagre that it is practically left to the promoters of the scheme to draw their own charter of incorporation. The capital stock is to be not less than $100,000, and no provision is made for the incorporating of any company without a capital. The rate of dividends to the stockholders, the proportion of profits to be paid the policy-holders, and the time of payment, are not provided for in the law, and are left to be settled by the associates. The consequence is that no two companies are alike in this respect. In some of them the stockholder receives an interest of seven per cent. upon his stock, and is entitled to no more under any circumstances, the whole surplus or profits being divided among the policy-holders. In others, in addition to interest, the stock is entitled to participate with the policies in the surplus. The extent of this participation varies; in some it is fixed at ten per cent. of the whole profits, to the stock-holders, in others twenty, and in others thirty per cent. In all of them, however, with one exception, participation by the policy-holders in the profits of the business is a rule. To a greater or lesser extent, in some to the whole profits, it is the recognized rule that the holders of policies are to receive dividends or bonuses from the companies out of the profits. In effect, therefore, so far as participation in the profits of the business goes, all our companies, with the one exception before mentioned, are mutual companies.
The act makes no provision for the government of the corporations it allows to be created. It leaves it to the promoters to state the mode and manner in which the corporate powers shall be exercised, and the manner of electing trustees, or directors, and officers. The natural consequence of this provision is, that the manner of electing trustees and directors varies in different companies. In some of them the stock-holders alone have any voice or vote, in others the policy-holders are allowed, under certain restrictions, to vote, but it is safe to say that in all of them the power is kept in the hands of the stock-holders as far as it possibly can be; and the policy-holders are allowed as little voice in the management of the company as the stock-holders can permit.