Knoxville weekly chronicle. [volume] (Knoxville, Tenn.) 1870-1875, 1872-01-24
How BUILDING AND LOAN ASSOCIATIONS
~ ARE OPERATED ~ "'

tuition, bylaws and charter of building
and loan association in Pennsylvania
which we have examined with some care.
AS the subject of such an organization
is just now engaging the attention of n
number of our citizens, we propose to give
brief outline of its general features.
The object of such an association is tho
mutual benefit of the corporators as mem
bers of mutual saving fund society Nv
the accumulation of a fund by weekly pay
ments of dues and interest and from other
receipts sufficient to loan to each and ey-
cry member wanting money, or loan
specified sum at specified interest The
sum generally fixed upon is two hundred
dollars, loaned out on bidding, at the
highest premium provided it is not less
than ten per cent, and the premium to
be deducted out of the loan, when advanced.
Let us give practical illustration of the
workings of such an association. Suppose
one hundred mechanics organize into such
a body, each taking two shares of stock.
They begin by electing officers, q Presi-
dent, Secretary, Treasurer and ten Direc-
tors. Each member pays an initiation fee
of say fifty cents on each share, which
would give fund of one hundred dollars.
to begin with. They next agree to pay on
each share monthly due of one dollar a
monthly due of one dollar, which would
give them from this source a monthly rev.
enue of two hundred dollars, For failure
to attend meetings or pay dues, small fines
are assessed. On the basis above given, at
the end of the first month the association
has three hundred dollars, enough to begin
n loan. Suppose the loans are fixed at two.
hundred dollars. The association puts up
this sum to loan to the highest bidder for
one year on security to be approved by the
board of directors. 1t is bid off say at ten
per cent. The borrower pays his premium
in advance and gets the nett proceeds, one
hundred and eighty dollars, for which
he gives his mortgage or other security.
The balance on hand is loaned until the,
end of the second month, when the second
monthly dues collected gives the associa-
ton fund of three hundred and twenty
dollars, or perhaps by new additions
enough to make four hundred two addition
al loans. These loans are again bid off,the
premium deducted and added to the fund
accommodating for the the third month. We
have given enough now to see the theory of
these mutual saving funds. If we ex-.
anime it we see the tax to each member ie
small. He Begins by paying one dollar, or
he wishes to take. The burden upon him
is light, he does not feel it, and yet at the.
end of "a year, by a tax of twenty-five dol
lars which he pays out in driblets, he finds
himself the owner of valuable stock, GER
tain to appreciate every year, until the
IL
vided and certain to amount to more than
his loan, for which he has given security.
The interest Is high, it is said, yes but
the borrower Is paying it to himself. He
gets his share of the premium paid on every
loan, and the higher it is bid off the better
for him. If he can not afford to pay the
highest per cent. he can wait until those
most in need get their loans when lie can
be Accommodated. The protection against
failures and dishonesty is by care in the
admission of members and by the selec--
ton of good officers who will see that the
loans are amply secured. These officers
are paid little for their troubles, and
must be stockholders. Guard against COM
binations by limiting the number of sharess
each member can take to five or ten,
Each one will govern himself in taking
shares by the amount he can afford to pay
each month in dues.
These associations are numerous in some
of the States, and SO far as we know, have
have been successful. They are beneficial
for mechanics, clerks or men of moderate
means in any vocation. The principle
upon which they are based is that they are
an inducemcnt to men to sane their earn
ings and to mutually aid each other.
not only by loans, but by division among
themselves of the interest that would un-
der other circumstances go to the banks
and brokers'
The Association in Pennsylvania from,
"hNoC pliulSu idW6 we Rlean
the above facts, send us also their first an
nual statement of their treasurer 1t is a
proof Of the great benefits of such organiza--
tons. The number of shares reported at
the end of the year is $50. Their inita-
ton fee was twenty-five cents and their
monthly dues one dollar on each share.
The total receipts from dues, fines, interest.
&C., the first year was $16,79l 40. The
number .of loans was 100 and the net
amount paid on them, S15,072 25. The
cash in the treasury at the end of the year
was 81 1913. Total expenses, including
salaries and the extra expenses of purchas.
Ing books, seals, furniture, printing laws,
procuring charter, &C., incident to the first
year was $500. ('rhe expenses need not
exceed $500, annually. The assets at the
end of the year were SIS ,621 So.
1t requires but q little reckoning to show
that the above Is a fine exhibit and certain
to prove very profitable investment. We
have all the papers necessary to explain
the plan for such an association, ard would
be glad to show them to any persons in
terested. We would be especially glad to
see our working mon and young men or
ganize to give each other mutual aid In
this way, confident that they would find
it a profitable enterprise, and that several
such associations would materially add 10
the prosperity Of our city
THE Clarksville (Tenn.) Chronicle con-
tains the following atrocious article. Its
editor, we presume, claims to be one of the