Spirit of Jefferson. [volume] (Charles Town, Va. [W. Va.]) 1844-1948, 1867-11-19
BUILDING ASSOCIATIONS

deavOr to explain, Is far as understand them
the organizations known as = Building Asso.
ciations," and the mode of their operations.
The object of these associations Is not onIv
to provide Savings Banks, in fact, for those
who are willing aud able to set apart n portion
of their earnings, but also TO enable them to
become partners In an active organization.
whose capital is furnished by deposit of
these savings, and whose profits are fairly di-
Vided among all the members of the partner
ship. The scheme of the Building Associa-
ton is as follows
The members determine for themselves
what shall be the capital of the Association,
and what the number of shares into which it
shall be divided, and their par value. An
order of incorporation is then obtained from
the Secretary of State, the proper offs
GERS to conduct its affairs ara elected, aud
it is ready for business.
. Without election, and without any test
whatever, any ore may subscribe for any mum.
Der of shares which he has the ability to
take, IN accordance with the terms prescribed
l,y the associatiOG. Certificates for these
shares are given 70 the shareholder, which
are in the nature of certificates of indebted
ness of the association to him. The means
with which the association pays this indebt~
edness or as 1t Is termed, yseieeRgs its shares.
are Tie amounts periodically paid BIZ the hold
er and has portion IF the prDyfIs Of ,6e Gsso-
cation. For each share he owns he is re-
CURED to pay small sum weekly or months
Iy-usuaiiy Fifty cents per week. That is all
he Hsetf to pay.
The association receives this small sum,
from time to time, and places it to his credit,
nnnl his weekly instruments, together with
the profits OF the association Gin which he
Part.cipates) will enable it to pay him the
full par value for each and every share he
holds. When it Is thus able to redeem its
stock or shares, or pay each shareholder dol
TAR for dollar for his share, the association
will have accomplished its purposes and it
will then be dissolved. :.
l perhaps may make the operation of the
scheme palmer by few illustrations:
Suppose the corporation OTgahized. and it
Is. determined that the number OF shares shall
be 1000, and their par value S2GU per share.
Each shareholder then by paying 81 cents
per week will have paid at the eud of each
year $40 AT the'end of ten years the As.
sOcIatIOn ought to be able, from the instaI-
ments paid by the shareholder himself. TO
redeem his share OF $3.50 in full. But the
profits which arc pr0pOrtiOnally divided
among the shareholders, added to the weekly
deposits, enable the Association to redeem its
stock or shares in about screen years. So that
the difference between an association OF this
description and u simple bank is this: In Il
bank deposits yield no interest, accumulate
no profits. aud it will require u deposit of 50
cents per week for ten years to reach the sum
Of $500. But by the mode of investment
now under considerations one will have at
the end of about SsUcn years, rs a result of
deposit of the OF ~ cents 4 week, a
like amount of $500. His share Of the pro
fits OF the building association will account
Tor the difference. The advantage of the as
ISOLATION over the bank is plainly seen. BY
paying fifty cents Il week he has to his credit
IN the association the same amount at the end
OF about screen years that he would have to
his credit in bank at the end of ten wears
Of course he saves the instalmeuts Of 50 cents
per week for the space of three years and
has saved just AS much money III the one case
in the other.
One OF the great purposes Of the associa.
ton is to enable men OF limited means and
who are subscribers to shares. to- borrow mon
ey on approved security and poy II bock. with
their share Of the assets Of the association.
There are two plans for lOaning the funds
OF the association, (Which if there he 900
shares will amount to $500 per week. both
OF which will be best explained By iIustra-
tions. The first is denominated the sinapLe
interest alone
is charged, aud. is as follows -
Suppose shareholder has two shares
(S52O) and he wants to borrow that sum on
property sufficient to secure it. The /isH sum
OF 5000 is advanced aud deed OF trust for
the payment OF il at simple interest is given
The shareholder continues to pay his stated
weekly IRstaIment, and when the association
Is able from It's net assests to redeem his two
shares (S52O,) the sun to which he will be
entitled will be equal to the debt covered by
the deed of trust aud of course the latter
will be cancelled or released, aud he will then
have had the benefit Of loan Of tSj2Ul and
have almost imPeroePtibly paid it off.
The second mode of luaniDg is known as
the, pTeAiUDI plan. II is as follows: Instead
Ut advancing the full amount Of the par value
Of the share Iedeening the share dollar
for dollar. as above, the bonds of the Hssocin.
ton are offered to shareholders for the Eot,esI
amount for which any one may be willing to
have his share redeemed which will be
equivalent, as We shall see, to bidding a pre-.
mum for the use Of the money. For instance:
Take, as before, the holder of two shares
CS52V). The holder may offer them for re.
demptlon say for the sum Of $500. II the
proposition is accepted by the association. a
deed OF trust is given to secure the payment
OF the par value 1920. The indebtedness
will be discharged, as before. whenever the
instruments (whicb will still be continued to
be Paid) and the profits (Which go to the
credit Of the shareholder) shall equal the par
value of the two certificates Of stock. 1t GiIi
be read 3 perceived IN the last case. how
ever, that the borrower, or he who has his
shares redeemed IN advance. viii actually Dsy
premium OF tl.sHIy dollars for the REDEEM,
ton Of his stock
But it uoust always be borne in mind that
whether the borrower, or he who has shares
redeemed, pay simple interest or premium,
as he Is member Of the association, he par.