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BUILDING SOCIETIES
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See also:BUILDING See also:SOCIETIES , the name given to societies " for the purpose of raising, by the subscriptions of the members, a stock or fund for making advances to members out of the funds of the society upon See also:freehold, See also:copyhold, or leasehold See also:estate by way of See also:mortgage," may be " either terminating or permanent" (Building Societies See also:Act 1874, § 13). A "terminating" society is one " which by its rules is to terminate at a fixed date, or when a result specified in its rules is attained "; a " permanent " society is one " which has not by its rules any such fixed date or specified result, at which it shall terminate " (§ 5). A more popular description of these societies would be—societies by means of which every See also:man may become " his own landlord," their See also:main purpose being to collect together the small periodical subscriptions of a number of members, until each in his turn has been able to receive a sum sufficient to aid him materially in buying his dwelling-See also:house. The origin and See also:early See also:history of these societies is not very clearly traceable. A mention of " building clubs " in See also:Birmingham occurs in 1795; one is known to have been established by See also:deed in the See also:year 1809 at See also:Greenwich; another is said to have been founded in 1825, under the auspices of the See also:earl of See also:Selkirk at See also:Kirkcudbright in See also:Scotland, and we learn (Scratchley, On Building Societies, p. 5) that similar societies in that See also:kingdom adopted the See also:title of " menages." See also:United Kingdom.—When the Friendly Societies Act of 1834 gave effect to the See also:wise and liberal policy of extending its benefits to societies for frugal investment, and generally to all associations having a similar legal See also:object, several building societies were certified under it,—so many, indeed, that in 1836 a See also:short act was passed confirming to them the privileges granted by the Friendly Societies Act, and according to them the additional privileges (very valuable at that See also:time) of exemption from the See also:usury See also:laws, simplicity in forms of See also:conveyance, See also:power to reconvey by a See also:mere endorsement under the hands of the trustees for the time being, and exemption from See also:stamp See also:duty. This act remained unaltered until 1874, when an act was passed at the instance of the building societies conferring upon them several other privileges, and relieving them of some disabilities and doubts, which had grown up from the judicial expositions of the act of 1836. It made future building societies incorporated bodies, and extended the See also:privilege of See also:incorporation to existing societies upon application, so that members and all who derive title through them were relieved from having to trace that title through the successive trustees of a society. It also gave a distinct See also:declaration to the members of entire freedom from liability to pay anything beyond the arrears due from them at the time of winding up, or the amount actually secured by their mortgage deeds. Power to See also:borrow See also:money was also expressly given to the societies by the act, but upon two conditions: that the See also:limitation ofliability must be made known to the lender, by being printed on the See also:acknowledgment for the See also:loan, and that the borrowed money must not exceed two-thirds of the amount secured by mortgage from the members, or, in a terminating society, one year's income from subscriptions. Previous to the passing of the act (or rather to the judicial decision in See also:Laing v. Read, which the clause of the act made statutory) there had been, on the one See also:hand, See also:grave doubts on high legal authority whether a society could borrow money at all; while, on the other hand, many societies in See also:order to raise funds carried on the business of See also:deposit See also:banks to an extent far exceeding the amounts used by them for their legitimate purpose of investment on mortgage. It enacted, that if a society borrowed more than the See also:statute authorizes, the See also:directors accepting the loan should be personally responsible for the excess. By an act passed in 1894 all the Benefit Building Societies established under the act of 1836 after the year 1856 were required to become incorporated under the act of 1874• There are, therefore, three categories of building societies:—(1) Those established before 1856, which have not been incorporated under the act of 1894 and remain under the act of 1836. (2) Those established before 1894 under the act of 1836, which have been incorporated under the act of 1874. (3) Those which have been established since the act of 1874 was passed. The first class still act by means of trustees. Of these societies there are only 62 remaining in existence, and their number cannot be increased. The second and third classes exceed 2000 in number. The early societies were all " terminating, "—consisting of a limited number of members, and coming to an end as soon as every member had received the amount agreed upon as the value of his shares. Take, as a See also:simple typical example of the working of such a society, one the shares of which are £120 each, realizable by subscriptions of See also:ros. a See also:month during 14 years. Fourteen years happens to be nearly the time in which, at 5% See also:compound See also:interest, a sum of money becomes doubled. Hence the See also:present value, at the commencement of the society, of the £120 to be realized at its conclusion, or (what is the same thing) of the subscriptions of 1os. a month by which that £120 is to be raised, is £6o. If such a society had issued 120 shares, the aggregate subscriptions for the first month of its existence would amount to exactly the sum required to pay one member the present value of one See also:share. One member would accordingly receive a sum down of £6o, and in order to protect the other members from loss, would execute a mortgage of his dwelling-house for ensuring the See also:payment of the future subscription of 1os. per month until every member had in like manner obtained an advance upon his shares, or accumulated the £120 per share. As £6o is not of itself enough to buy a house, even of the most modest See also:kind, every member desirous of using the society for its See also:original purpose of obtaining a dwelling-house by its means would require to take more than one share. The act of 1836 limited the amount of each share to £150, and the amount of the monthly contributions on each share to £1, but did not limit the number of shares a member might hold. The earlier formed societies (in See also:London at least) did not usually adopt the title " Building Society "; or they added to it some further descriptive title, as " Accumulating Fund," " Savings Fund," or " Investment Association." Several are described as " Societies for obtaining freehold See also:property," or simply as " Mutual Associations," or " Societies of Equality." The building societies in Scotland are mostly called " Property Investment," or " Economic." Although the See also:term " Benefit Building Society" occurs in the title to the act of 1836, it was not till 1849 that it became in See also:England the See also:sole distinctive name of these societies; and it cannot be said to be a happy description of them, for as ordinarily constituted they undertake no building operations whatever, and merely advance money to their members to enable them to build or to buy dwelling-houses or See also:land. The name " Building Society," too, leaves wholly out of sight the important functions these societies fulfil as means of in-vestment of small savings. The act of 1836 defined them as societies to enable every member to receive the amount or value of a share or shares to erect or See also:purchase a dwelling-house, &c., but a member who did not See also:desire to erect or purchase a dwelling-house might still receive out of the funds of the society the amount or value of his shares, improved by the payments of interest made by those to whom shares had been advanced. About 1846 an important modification of the See also:system of these societies was introduced, by the invention of the " permanent " See also:plan, which was adopted by a See also:great number of the societies established after that date. It was seen that these societies really consist of two classes of members; that those who do not care to have, or have not yet received, an advance upon mortgage See also:security See also:ate mere investors, and that it matters little when theycommence investing, or to what amount; while those to whom advances have been made are really debtors to the society, and arrangements for enabling them to pay off their See also:debt in various terms of years, according to their convenience, would be of See also:advantage both to themselves and the society. By permitting members to enter at any time without back-payment, and by granting advances for any term of years agreed upon, a continuous inflow of funds, and a continuous means of profitable investment of them, would be secured. The interest of each member in the society would terminate when his share was realized, or his advance paid off, but the society would continue with the accruing subscriptions of other members employed in making other advances. Under this system building societies largely increased and See also:developed. The royal commissioners who inquired into the subject in 1872 estimated the See also:total See also:assets of the societies in 1870 at 17 millions, and their See also:annual income at 11 millions. The more See also:complete returns, afterwards obtained, indicate that this was an under-estimate. A variety of the terminating class of societies met at one time with considerable favour under the name of " Starr Bowkett " or " mutual " societies, of which more than a thousand were established. They differed from the typical society above described, in the contribution of a member who had not received an advance being much smaller, while the amount of the advance was much larger, and it was made without any calculation of interest. Thus a society issued, say, 500 shares, on which the contributions were to be 1s. 3d. per See also:week, and, as soon as a sum of £300 accumulated allotted it by See also:ballot to one of the shareholders, on See also:condition that he was to repay it without interest by instalments in to or 122 years, and at the same time to keep up his share-contributions. The fortunate recipient of the See also:appropriation was at See also:liberty to sell it, and frequently did so at a profit; but (except from fines) no profit whatever was earned by those who did not succeed in getting an appropriation, and as the number of members successful in the ballot must necessarily be small in the earlier years of the society, the others frequently became discontented and retired. These societies could not borrow money, for as they received no interest they could not pay any. The plan was afterwards modified by granting the appropriations alternately by ballot and See also:sale, so that by the premiums paid on the sales (which are the same in effect as payments of interest on the amount actually advanced) profits might be earned for the investing members. The formation of societies of this class ceased on the passing of the act of 1894, by which balloting for advances was prohibited in societies thereafter established. A further modification of the " mutual " plan was to make all the appropriations by sale. The effect of this was to bring the mutual society back to the See also:ordinary See also:form; for it amounts to precisely the same thing for a man to pay los. a month on a loan of £6o for 14 years, as for him to borrow a nominal sum of £84 for the same See also:period, repayable in the same manner, but to allow £24 off the loan as a " bidding " at the sale. The only difference between the two classes of societies is that the interest which the member pays who bids for his advance depends on the amount of competition at the bidding, and is not fixed by a See also:rule of the society. For several years the progress of building societies in See also:general was steady, but there were not wanting signs that their prosperity was unsubstantial. A practice of receiving deposits repayable at See also:call had sprung up, which must See also:lead to embarrassment where the funds are invested in loans repayable during a See also:long term of years. It was surmised, if not actually known, that many societies had large amounts of property on their hands, which had been reduced into See also:possession in consequence of the See also:default of borrowers in paying their instalments. A practice had also grown up of establishing See also:mushroom societies, which did little more than pay fees to the promoters. The vicious system of trafficking in advances that had been awarded by ballot, near akin to gambling, prevailed in many societies. These signs of weakness had been observed by the well-informed, and the disastrous failure of a large society incorporated under the act of 1874, the Liberator, which had in fact long ceased to do any genuine building society business, hastened the crisis. The This society. had See also:drawn funds to the amount of "See also:Leber- more than a million See also:sterling from provident See also:people in ator." all classes of the See also:population and all parts of the See also:country by specious representations, and had applied those funds not to the legitimate purpose of a building society, but to the support of other undertakings in which the same persons were concerned who were the active managers of the society. The consequence was that the whole See also:group of concerns became insolvent (Oct. 1892), and the Liberator depositors and shareholders were defrauded of every See also:penny of their investments. Many of them suffered great See also:distress from the loss of their savings, and some were absolutely ruined. The result was to weaken confidence in building societies generally, and this was very marked in the rapid decline of the amount of the See also:capital of the incorporated building societies. From its highest point (nearly 54 millions) reached in 1887, it See also:fell to below 43 millions in 1895. On some societies, which had adopted the deposit system, a run was made, and several were unable to stand it. The See also:Birkbeck Society was for two days besieged by an anxious See also:crowd of depositors clamouring to withdraw their money; but luckily for that society, and for the building societies generally, a very large portion of its funds was invested in easily convertible securities, and it was enabled by that means to get sufficient assistance from the See also:Bank of England to pay without a moment's hesitation every depositor who asked for his money. Its See also:credit was so firmly established by this means that many persons sought to pay money in. Had this very large society succumbed, the results would have been disastrous to the whole See also:body of building societies. As the See also:case stood, the energetic means it adopted to See also:save its own credit reacted in favour of the societies generally. The Liberator disaster convinced everybody that something must be done towards avoiding such calamities in future. The See also:government of the See also:day brought in a See also:bill for that purpose, and several private members also prepared measures—most of them more stringent than the government bill. All the bills were referred to a select See also:committee, of which Mr See also:Herbert See also:Gladstone was the chairman. As the result of the deliberations of the committee, the Building Societies Act of 1894 was passed. Meanwhile the Rt. Hon. W. L. See also:Jackson(afterwards See also:Lord Allerton), a member of the committee, moved for an address to the See also:crown for a return of the property held in possession by building societies. This was the first time such a return had been called for, and the managers of the societies much resented it; there were no means of enforcing the return, and the consequence was that many large societies failed to make it, notwithstanding frequent applications. by the registrar. The act provided that henceforth all incorporated societies should furnish returns in a prescribed form, including schedules showing respectively the mortgages for amounts exceeding £5000; the properties of which the societies had taken possession for more than twelve months through default of the mortgagors; and the mortgages which were more than twelve months in arrear of repayment subscription. The act did not come into operation till the 1st of See also:January 1895, and the first complete return under it was not due till 1896, when it appeared that the properties in possession at the time of Mr Jackson's return must have been counted for at least seven and a See also:half millions in the assets of the societies. In a few years after the passing of the act the societies reduced their properties in possession from 14% of the whole of the mortgages to 5%, or, in other words, reduced them to one-third of the original amount, from 74 millions to 21 millions. Though this operation must have been attended with some See also:sacrifice in many societies, upon the whole the See also:balance of profit has increased rather than diminished. Thus this See also:provision of the act, though it greatly alarmed the managers of societies, was really a blessing in disguise. The act also gave power to the registrar, upon the application of ten members, to order an inspection of the books of a society, but it did not confer upon individual members the right to inspect the books, which would have been more effective. It empowered the registrar, upon the.application of one-fifth of the members, to order an inspection upon See also:oath into the affairs of a society, or to investigate its affairs with a view to See also:dissolution, and even in certain cases to proceed without an application from members. It gave him ample See also:powers to See also:deal with a society which upon such investigation proved to be insolvent, and these were exercised so as to procure the cheap and speedy dissolution of such societies. It also prohibited the future See also:establishment of societies making advances by ballot, or dependent on any See also:chance or See also:lot, and provided an easy method by which existing societies could discontinue the practice of balloting. This method has been adopted in a few instances only. The act, or the circumstances which led to it, has greatly diminished the number of new societies applying for registry. The See also:statistics of building societies belonging to all the three classes mentioned show that there were on the 31st of See also:December 1904, 2118 societies in existence in the United Kingdom. Of these, 2075, having 609,785 members, made returns. Their See also:gross receipts for the See also:financial year were £38,729,099, and the amount advanced on mortgage during the year was £9,589,864. The capital belonging to their members was £39,408,430, and the undivided balance of profit £4,004,547. Their liabilities to depositors and other creditors were £24,838,290. To meet this they had mortgages on which £53,196,112 was due, but of this £2,443,255 was on properties which had been in possession more than a year, and £222,444 on mortgages which had fallen into arrear more than a year. Their other assets were £14,952,485, and certain societies showed a deficit balance which in the aggregate was £102,670. As compared with 1895, when first returns were obtained from unincorporated societies, these figures show an increase in income of 30 %, in assets of 23 %, and in profit balances of 46 %, and a diminution of the properties in possession and mortgages in arrear of 14 % in the nine years. The total assets and income are more than three times the amount of the conjectural estimate made for 1870 by the royal See also:commission. It is not too much to say that a See also:quarter ofa million persons have been enabled by means of building societies to become the proprietors of their own homes. In See also:recent years, several rivals to building societies have sprung up. Friendly societies have largely taken to investing their surplus funds in loans to members on the building society principle. See also:Industrial and provident land and building societies have been formed. The legislature has authorized See also:local authorities to lend money to the working classes to enable them to buy their dwelling-houses. See also:Bond and investment companies have been formed under the Companies Acts, and are under no restriction as to balloting for appropriation. All these have not yet had any perceptible effect in checking the growth of the building society See also:movement, and it is not thought that they will permanently do so. See also:British Colonies.—In several of the British colonies, legislation similar to that of the See also:mother country has been adopted. In See also:Victoria, See also:Australia, a crisis occurred, in which many building societies suffered severely. In the other Australian colonies the building society movement has made progress, but not to a very large extent. In the Dominion of See also:Canada these societies are sometimes called " loan companies " and are not restricted in their investments to loans on real estates, but about 90 % of their advances are on that security. At the See also:close of the year 1904 their liabilities to stockholders exceeded £13,000,000, and to the public £21,000,000. The uncalled capital was £5,000,000. The balance of current loans was £28,000,000, and the property owned by the societies exceeded £7,000,000. See also:Belgium, &c.—In Belgium, the Government Savings Bank has power to make advances of money to societies of credit or of construction to enable their members to become owners of dwelling-houses. The advance is made to the society at 3 or sometimes at 24 % interest, and the borrower pays 4 %. In the great See also:majority of cases the borrower effects an See also:insurance with the savings bank so that his repayments terminate at his See also:death. On the 31st of December 1903 nearly 25,000 advances were in course of repayment. In See also:Germany, building societies are recognized as a form of societies for self-help, but are not many in number, being overshadowed by the great organization of credit societies founded by Schulze-See also:Delitzsch. In other countries there has been no See also:special legislation for building societies similar to that of the United Kingdom, and though societies with the same special object probably exist, See also:separate See also:information with regard to them is not available. (E. W. B.) United States.— Building and loan association " is a general term applied in the United States to such institutions as mutual loan associations, See also:homestead aid associations, savings fund and loan associations, co-operative banks, co-operative savings and loan associations, &c. They are private corporations, for the See also:accumulation of savings, and for the loaning of money to build homes. The first association of this kind in the United States of which there is any See also:record was organized at Frankford, a suburb of See also:Philadelphia, on the 3rd of January 1831, under the title of the See also:Oxford Provident Building Association. Their permanent inception took See also:place between 1840 and 1850. The receipts or capital of the building and loan association consists of periodical payments by the members, interest and premiums paid by borrowing members or others, fixed periodical instalments by borrowing members, fines for failures to pay such fixed instalments, forfeitures, fees for transferring stock, entrance fees, and any other revenues or payments all of which go into the See also:common See also:treasury. When the See also:instalment payments and profits of all kinds equal the See also:face value of all the shares issued, the assets, over and above expenses and losses, are apportioned among members, and this See also:apportionment cancels the borrower's debt, while the non-borrower is given the amount of his stock. A man who wishes to borrow, let us say, $s000 for the erection of a house ordinarily takes five shares in an association, each of which, when he has paid all the successive instalments on it, will be See also:worth $200, and he must offer suitable security for his loan, usually the lot on which he is to build. The money is not See also:lent to him at See also:regular rates of interest, as in the case of a savings bank or other financial institution, but is put up at See also:auction usually in open See also:meeting at the time of the payment of dues, and is awarded to the member bidding the highest See also:premium. To secure the $r000 borrowed, the member gives the association a mortgage on his property and pledges his five shares of stock. Some associations, when the demand for money from the shareholders does not exhaust the surplus, lend their funds to persons not shareholders, upon such terms and conditions as may be approved by their directors. Herein lies a danger, for such loans are some-times made in a speculative way, or on insufficient land value. Some associations make stock loans, or loans on the shares held by a stockholder without real estate security; these vary in different associations, some applying the same rules as to real estate loans. To See also:cancel his debt the stockholder is constantly paying his monthly or semi-monthly dues, until such time as these payments, plus the accumulation of profits through compound interest, mature the shares at $200 each, when he surrenders his shares, and the debt upon his property is cancelled. Every member of a building and loan association must be a stockholder, and the amount of interest which a member has in a Shares. building and loan association is indicated by the number of shares he holds, the See also:age of the shares, and their maturing value. The difference between a stockholder in such an association and one in an ordinary See also:corporation for usual business purposes lies in the fact that in the latter the member or stockholder See also:buys his stock and pays for it at once, and as a rule is not called upon for further payment; all profits on such See also:stocks are received through dividends, the value of shares depending upon the successful operation of the business. In the former the stockholder or member pays a stipulated minimum sum, say $1, when he takes his member-See also:ship and buys a share of stock. He continues to pay a like sum each month until the aggregate of sums paid, increased by the profits and all other See also:sources of-income, amounts to the maturing value of the stock, usually $200, when the stockholder is entitled to the full maturing value of the share and surrenders the same. Shares are usually issued in See also:series. When a second series is issued the issue of the stock of the first series ceases. Profits are distributed and losses apportioned before a new series can he issued. The term during which a series is open for subscription differs, but it usually extends over three or six months, and sometimes a year. Some associations, usually known as perpetual associations, issue a new series of stock without regard to the time of maturity of previous issues. It is the practice in such associations to issue a new series of stock every year. Instead of shares that are paid in instalments, some associations issue prepaid shares and paid-up shares. Prepaid shares, known also as partly paid-up shares, are issued at a fixed See also:price per share in advance. They usually participate as fully in the profits as the regular instalment shares, and when the amount originally paid for such shares, together with the dividends accrued thereon, reaches the maturing or See also:par value, they are disposed of in the same manner as regular instalment shares. Some associations, instead of crediting all the profits made on this class of shares, allow a fixed See also:rate of interest on the amount paid therefor at each See also:dividend period, which is paid in See also:cash to the holder thereof. This interest is then deducted from the profits to which the shares are entitled, and the See also:remainder is credited to the shares until such unpaid portion of the profits, added to the amount originally paid, equals the maturing or par value. Paid-up shares are issued upon the payment of the full maturity or par value, when a certificate of paid-up stock is issued, the owners being entitled to receive in cash the amount Iv. 25of all dividends declared thereon, subject to such conditions or limitations as may be agreed upon. These shares sometimes participate as fully in the profits as the regular instalment shares, but in most cases a fixed rate of interest only is allowed, the holders of the shares usually assigning to the association all right to profits above that amount. Certificates of matured shares are also issued to holders of regular instalment shares, who prefer to leave their money with the association as an investment. See also:Prior to the maturing of a share it has two values, the holding or See also:book value and the withdrawal value. The book value is ascertained by adding all the dues that have been paid to the profits that have accrued; that is to say, it is the actual value of a share at any particular time. The withdrawal value is that amount of the book value which the association is willing to pay to a shareholder who desires to sever his connexion with the association before his share is matured. Some associations do not permit their members to withdraw prior to the maturing of their shares. Then the only way a shareholder can realize upon his shares is by selling them to some other See also:person at whatever price he can obtain. There are twelve or more plans for the withdrawal of funds. Every association has full regulations on all such matters. The purchase of a share binds the shareholder to the See also:necessity of keeping up his dues, and thus secures to him not only the benefits of a savings bank, but the benefit of constantly accruing yarlacompound interest. This accomplishes the first feature tiohsin of the See also:motive of a building and loan association. The methods. second is accomplished by enabling a man to borrow money for building purposes. It is a See also:moot question whether this method of obtaining money for the building of homes is more or less economical than that of obtaining it from the ordinary savings banks or from other sources. Sometimes the premium which must be paid to secure a loan increases the regular interest to such an amount as to make the building and loan method more expensive than the ordinary method of borrowing money, but a building and loan association has a moral See also:influence upon its members, in that it encourages a regular payment of instalments. Some associations have a fixed or established premium rate, and under such circumstances loans are awarded to the members in the order of their applications or by lot. The premium may consist of the amount which the borrower pays in excess of the legal interest, or it may consist of a certain number of payments of dues or of interest to be made in advance. There are very many plans for the payment of premiums, nearly seventy See also:relating to real estate loans being in See also:vogue in different associations in different parts of the United States; but in nearly all cases the borrower makes his regular payments of dues and interest until the shares pledged have reached maturing value. There is also a great variety of plans for the See also:distribution of profits, something like twenty-five such plans being in existence. The methods of calculating interest and profits are somewhat complicated, but they are all found in the books to which reference will be made. The various plans for the payment of premiums, distribution of profits, and withdrawals, and the calculations under each, are given in full in the ninth annual See also:report of the U.S. coinnlissioner of labour. Most building and loan associations confine their operations to a small community, usually to the See also:county in which they are situated; but some of them operate on a large See also:scale, extending their business enterprises even beyond the See also:borders of their own See also:state. These See also:national associations are ready to make loans on property anywhere, and sell their shares to any person without reference to his See also:residence. In local'associatio.ns the total amount of dues paid in by the share-holders forms the basis for the distribution of profits, while in most national associations only a portion of the dues paid in by the share-holders is considered in the distribution. For instance, in a national association the dues are generally 6o cents a share per month, out of which either 8 or to cents are carried to an expense fund, the remainder being credited on the loan fund. The expense fund thus created is lost to the shareholders, except in the case of a few associations which carry the unexpended balances to the profit and loss See also:account, and whatever profits are made are apportioned on the amount of dues credited to the loan fund only. The creation of an expense fund in the nationals has sometimes been the source of disaster. Safety or security in both local and national associations depends principally upon the integrity with which their affairs are conducted, and not so much upon the form of organization or the method of distribution. Some of the states—New See also:York, See also:Massachusetts, New See also:Jersey, See also:Ohio, See also:Illinois, See also:California and others—bring building and loan associations under the same general supervision of See also:law thrown around savings banks. In some states nothing is officially known of them beyond the formalities of their incorporation. Though the business of the associations is conducted by men not trained as bankers, it yet meets with rare success. Associations disband when not successful, but when they disband great loss does not occur because the whole business of the association consists of its loans, and these loans are to its own shareholders, as a rule, who hold the securities in their associated forms. The a See also:mount of money on hand is always small, because it is sold or lent as fast as paid in. A disbanded association, therefore, simply returns to its own members their own property, and but few real losses occur. In-vestment in a building and loan association is as nearly absolutely
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safe as it can be, for the monthly dues and the accumulated profits, which give the actual capital of the association, are lent or sold, as it is termed, by the association as fast as they accumulate, and upon real estate or upon the stock of the association itself. The opportunities for See also:embezzlement, therefore, or for shrinkage of securities, are reduced to the minimum, and an almost See also:absolute safety of the investment is secured.
The growth of these associations has been very rapid since 184o, and at the opening of the loth See also:century they numbered nearly 6000. The Federal government, through the See also:department of labour, made an investigation of building and loan associations, and published its report in 1893. The total dues paid in on instalment shares amounted then to $450,667,594. The business represented by this great sum, conducted quietly, with little or no advertising, and without the experienced banker in See also:charge, shows that the common people, in their own ways, are quite competent to take care of their savings, especially when it was shown that but See also:thirty-five of the associations then in existence met with a See also:net loss at the end of their latest fiscal year, and that this loss amounted to only a little over $23,000. Bulletin No. so (May 1897) of the U. S. department of labour contained a calculation of the business at that date, based upon such states' reports as were available. That calculation showed a growth in almost every See also:item. During the years of depression ending with 1899 the growth of building and loan associations was naturally slower than in prosperous periods.
See Ninth Annual Report of U.S.A. See also:Commissioner of Labour (1893) Bulletin, No. so (May 1897), of the Department of Labour; See also:Edmund Rigley, How to See also:manage Building Associations (1873); See also:Seymour See also:Dexter, A See also:Treatise on Co-operation Savings and Loan Associations (New York, 1891); See also: See also:Thompson, A Treatise on Building Associations (See also:Chicago, 1892). (C. D. Additional information and CommentsThere are no comments yet for this article.
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