The medallion system dates from a Depression-era city law designed to address an overabundance of taxis that depressed driver earnings and congested city streets. After rejecting the recommendations of a series of mayoral panels studying taxi problems, the city Board of Aldermen in 1937 adopted the Haas Act, which placed a moratorium on the issuance of any more taxicab licenses. Over the next several years, the number of cabs, which had peaked at 21,000 in 1931, fell from 13,500 in 1937 to the present number of approximately 12,000 because the licenses of taxi owners leaving the industry were not reissued.
While the vehicle cap is its most famous provision, the Haas Act had other significant and enduring features. It provided for the automatic renewal of vehicle licenses and allowed for the transfer of licenses between owners, conditioned only on City approval of the new owners' qualifications. This transferability provision was vital to the subsequent establishment of license values. The Act also erected a wall between fleet-owned taxi licenses and individually owned licenses, a clause intended to ensure the survival of owner-drivers.
The Haas Act also created a mechanism under which the city could issue additional vehicle licenses after a deliberative administrative process. This provision, which some critics of the Act have ignored, was never exercised and was removed in a 1971 rewrite of the law. When the City failed to expand the taxi industry despite post-World War II economic growth, taxicab licenses developed a trading value in the open market.
In many U.S. cities, a local authority limits the supply of taxis, which is often done by excluding anyone who does not own a medallion (a piece of "tin" affixed prominently on the car). A taxicab medallion is therefore a type of property that allows the owner to operate a cab, at the exclusion of others. For example, in Manhattan only yellow cabs with medallions can pick up passengers by street hail (those without medallions must pre-arrange pick-up). The debate over artificially restricting the supply of taxicabs is a problem often discussed.
Depending on a number of factors including supply, local fares, interest rates and regulation, medallions can be very valuable. New York prices were about $155,000 for Individual Medallions and $220,000 for Fleet Medallions in 2004. In September 2012, prices were about $717,000 and $1,125,000 respectively in New York. Due to the price of medallions, they are often not owned by the drivers themselves, but are instead leased.
- In New York there are approximately 8,500 Corporate Medallions & 5,000 Individual Medallions
- In Chicago there are approximately 7,000 Medallions
- In Boston there are approximately 2,000 Medallions
- Other major medallion cities include Newark, Philadelphia, Miami and Los Angeles.
Owners of taxi medallions will often finance a portion of the purchase price with debt. Taxi medallions are also often bought and sold through brokers and are sometimes managed on behalf of investors by professional agents and fleets
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