The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1852-03-31

Building Associations.
10 TIE BDrroR or rul NEW YORK HERALD.
II was my intention ere this to reply to the COM
muncation Of JACOB Pscaro. contained in the
HERALD Of the 18th inst, but for want Of time
had to delay il. That gentleman appears TO be
very confident that the array Of figures sad his ar
gumcnt could not fail to convince every one that
two and two make Eve, and that there is mistake
in the proof be furnishes, that the society must
terminate in seven years Ind seven months, and
that, notwithstanding the tremendous shave in
giving $40 for share of $500, the borrower is still
benefited 1t is great pity that he should have
stopped his calculation ut the end Of the seventh
year, as he lost the chance of showing as conolu-
sivey how the so remaining unredeemed shares,
requiring $4,000 in cash, could have been paid,
for, by his own figures, If correct, there was on
hand only. $SSJ OO
more instalments would have produced. $4,000 90
The interest for months on 800, l42.... liza 81
In all. s2l, An 81
He would have found out that the society could not
be ready to Close and that it required at least
another year. His good advice to take five shares,
at $40, and pay 800 on account OF the house. and
two shares more in order to pay the remaining
81 900, at the termination Of the society, to cancel
the bond and mortgage, it appears was not followed
by many, for if the borrowers had found it so profit
shares left unredeemed, which is more likely than
So as in most societies only about one-half Of the
shares are redeemed. The society would, in that
case, have stopped redeeming at 5 years and 3
months, when the amount of redeemed shares
bearing interest $l45, 074, producing monthly
interest of $725 81 which, added to the monthly in
stalments Of $4,000, made the monthly income
$2,725 81, annually $2, 70l 0S which tho society
had to reserve for the payment of two hundred and
sixty shares, requiring $l3O000 In cash, and could
only put the money out at four or five pcr cent, and
realizing scarcely more interest than the amount of
expenses. To make up the said $50 900, it would
therefore have required about four years more and
i'll all over nine years
Let us now see how the borrower has been bene-
fitted by the operation and whether he had not
done better by borrowing $40 in the usual mode at
seven per cent, and ii, after having paid the in
tercst he had put the balance in the savings bank,
at 5 per cent, without giving bond and mortgage
for $500, and making himself liable for that amount
if had been foreclosed. The of the $40 costs
him, monthly, in the society, s. 7O or, semi-an-
nuay GIG 20. Now, if he applied to pay interest,
at per cent, 81 go and the balance of $ll 30
put in the savings bank, they would accumu-
late to tho OF Sl55 50 in six years; $lS6 90 in
seven years; $2l9 in eight years. and 1922 SO in
nine years, out of which he could pay off his debt
and he would have surplus left of $l2 96 in cash.
at the time when the society can, under the most
favorable circumstances, reach its termination.
That the investor who does not redeem his shares,
and those who sell their shares at the cttousyaua
ton, the only gamers, is matter of course for
where one loses another must gain, and there has
been yet game discovcreda at which all the players
win, though this magical effect is claimed for the
building associations.
Some are however, candid enough to say that
the borrower is more or less fceced, but TINT he
do no better nobody would otherwise loan him any
money and they are very benevoently disposed to
assist the poor by advancing him the for pur-
chasing home at discount of ~ per cont. What
fearful reaction will sooner or later take place whom
the poor victims find out that they have been alured
by false representations; that they obliged to
continue their monthly payments for three, five, and
perhaps more years longer than they made to
believe, and that perhaps, unable to continue them
THEN property is taken from them and they made
to pay more than they have received And where
win those men who have lent their names and inhu
to such schemes, hide their faces, when they at
last discover that whatever profit is made beyond that
by the action OF legitimate but compound interest
must be taken from the pocket ofsome to enrich
another. Much stress is laid upon the compromising
monthly, very few, if any, knowing that 500 will
produce in ten years, if compounded monthly at
per cent. $500 80; at 10 per cent. $210 40. If
yearly at per cent. 1886 r. at 10 per cent $2j727,
the difference being but trhing.
In speaking thus of building associations. / wish
to be understood that am a most ardent friend of
the system, provided it is pm honest, correct, and not
onesded principles. such as is carried in England
where the government has placed them under certain
regulations fixed by scientific men, and where all
the societies. at least the established on
the permanent plan. which is the only one which
will obvate the many and difficulties Of the
terminating system, as the bidding, the purchase OF
shares at fictitious prices, and the constant invest
mcnt of the funds. The trainers Of new association
ought to study the works of Scratchey and Stone,
and not follow in the paths of former societies, and
copy their and base their promises on false
statements of others. The law itself is defective
and ought to he called IAN act to authorize the
pundering OF the poor The writer offered to the
committee in the Legislature who had charge of it.
an explanation of the many abuses and errors, which
might have guided them in framing better law,
but it appears that they thought themselves wise
enough. and did not accept the offer.
Building associations, on the true principle,
indeed great improvement upon Savings Banks,
giving the members, one and ALL all the benefits of
the wonderful agency of compound interest, and it
is perfectly true that they enable the poor to pur
chase home at outlay of not more than they
have to pay for rcnts but they must have for their
motto ''ye and live
Respectfully yours. Sc. J. Il. h.
NEW YORK. March, 1852.