Evening star. [volume] (Washington, D.C.) 1854-1972, 1873-11-17
Largest Circulation in the District
Reading Matter on Every Page.
WASHINGTON CITY:
MON DAY. .......... November II, 1878
Are Building ASSOCIATIONS Oppressive
90 the Poor MAN.


20 the Poor MAN.
In the circuit court Of Baltimore last Friday.
Judge Pinkney filed an opinion in the case Of
the Baltimore Permanent Building and Land
Association, against one George W. Taylor. to
whom, IT appears, the association had loaned
s2,7oo, In consideration Of which he agreed to
pay the association 1.-THE mortgagee) the sum Of
sii.is week for ten years, that Is $40 weeks,
which amounts to the sum Of s5 sos %. In his
decision Judge Pinkney said he had formed and
frequently expressed the opinion that many
building associations "are got up and carried on
only for the purpose Of lending money at usury-
mere legal machinery for evadins the usury
laws, the bonus paid to the association BY the
borrower standing for the commission of the
regular usurer." The judge adds:
In our calculation above we have found that
III would take the defendant a little over 2s9
weeks, or say go weeks, to pay back the loan
OF $500, with interest at sir per cent Then
$50 weeks at s11.1s would be s3,12Iso; deduct
that amount (S3, i2l SO) from sI,isi, leaves
81 $50 %, excess of interest, and this sum Is
precisely one half of the excess of interest ex-
acted from the defendant by the terms of the
mortgage under consideration, or a difference
OF 81 SO % in favor of a loan at the same pre-
miums in conformity with the provisions of the
act of incorporation. ] am Of opinion, there
fore, that the mortgage is not authorized By the
act Of Incorporation, and consequently must be
considered as made with astranger, and as such
clearly usurious, the provisions of law applying
as well TO the premium as to the interest, both
being Of the same character"
The case was referred to the auditor to ascer-
tain the amount due on this mortgage in con-
formity with the principles of this opinion, and
the sale under the decree to be stayed until the
coming Of the auditors report. The American
says if this decision is sustained by the Court of
Appeals, il viii work an entire revolution in the
system Of loaning money by building associa-
tons, and will relieve many unfortunate per-
sons whose property Is mortgaged, and who are
struggling to pay debts which in equity they do
not owe.
They have curious notions in Maryland as to
what promotes or binders usurious practices.
1t Is certain that the antiquated usury laws of
that state really serve for the benefit of the
usurer, by frightening away capital that might
seek investment there from abroad, and also by
lettering home capitalists from lending money
at fair prevailing rates, while the usurer, under
the excuse Of the extra-hazardous nature of the
transaction, squeezes from the borrower from
ten to twenty times the legal interest. The
building associations are really the deadly foes
OF the usurer. They enable the borrower to get
money at what it Is worth at auction at the
time Of purchase, and take, what the usurer
and broker will not do, real estate as security.
At the same time the borrower shares In the
the benefit Of the higher rates of interest paid.
In the fact that the association winds up the
sooher anu ne mas 10 pay dues Tor less
number Of months. Should Judges Pinkney
OF Baltimore, and Humphreys of our
own court succeed by their decisions in
breaking down the building associations,
they would, instead of aiding the poor man, as
they seem to suppose, really be doing him the
greatest injury possible. The building associa-
ton IL, even more than the savings bank, pecu-
larry the institution of the poor man, inducing
habits Of saving, and enabling him to secure
either home on small monthly payments, or a
very handsome sum with the accrued interest
on the winding up of the association. As gen.
eral rule, too, the building associations are
safely and economically managed-a considera-
ton In these times when so many other institu-
tons In which poor men have invested their
savings have gone to smash. Altogether the
building association principle has worked so
benefcially in inducing habits of thrift and
saving, and in enabling large numbers Of poor
people, and people in moderate circumstances
TO buy houses of their own at a monthly rate
little II any more than they would have fritz
tered away In house rent, that 1t seems to us it
should be encouraged. Certainly it Is a very
superficial view that would rank it as the op-
pressor of the poor.