The Jeffersonian. [volume] (Stroudsburg, Pa.) 1853-1911, 1875-02-18
A Buildiug Association:

A leading citizen of Philadelphia furn-
| ishes the following interesting information
about the workings of the building associa-
ton and Of the peculiar system OF perpetual
and redeemable ground rates. He takes
the case Of a poor man earning small days
wages who determines to secure him
home The man, whom we will call John
Jones, goes to the extreme suburbs of the
city, about three-quarters of an hours ride
by street car from the State House, and
buys lot, say Of James Smith, Is feet
front on so foot street and 80 feet deep,
for $500, without paying for it, by enter
ing into an obligation to pay yearly rental
Of Sl2, or SIX per cent. As long as this
interest on the purchase money is paid an
nualiy the ground rent landlords he Is
called-cannot demand the principal
John now joins building association
and takes says five shares. On each share
81 is to be paid monthly, and as there are
l,000 shares, each month 81 900 is paid
into the association. Then the money so
paid in is put up at auction among the
members, and the bidding mounts up from
FIVE per cent. premium to perhaps twenty,
at which it is knocked down to John. He
agrees to pay besides his 81 per month per
share-say s. per month-the interest On
81 ,000, plus S200, 20 per cent. premium,
amounting to S72 per annum.
With this 81 geo John contracts with i
competent builder, who puts him up a
IA II feet front, leaving passage Of l2
feet on his l6-ioot lot His house is to be
Of brick, 32 feet deep, with we'll and
pump and shed over them and his lot
surrounded by fencing seven feet high. His
house will be entered by Il front door open
ing on parOr having one window front
and one OH the side Passing through the
paTlOr, door opens OH small entry, from
which stairs rise to the second story. On
the opposite side OF entry door opens into
the dining room, lighted with one window,
and through this John passes to his kitch-
en-, in which is a good range, At the kitch-
en- door under the shed stands the pump,
behind this again is the garden lot, 80 by
18.
Now let US examine the financial result
Of Johns experiment.
He pays
James Smith, ground rent per annum,
per cent, on $500, So
building association, s. per month,
amounting to, GO
Building association, interest On loan =
Taxes, g per SlJ0 on valuation of
house, say $500, 16
$3.50
Thus for S12 per month John has u
home all to himself, where the morals of
his family are preserved from the con
taminating influences OF the tenement house,
where the comfort and domesticity Of his
household are promoted, rnd to which he
is tempted to add one little thing and an
other
1t is in effect mortgage which never
natures unless there is failure to pay the
interest or it may be described as I rental,
which gives the renter permanent
possession Of the estate if he promptly
pays the rent So familiar and popular
has this mode Of conveyance become that
all the quotations of vacant lots are based
upon this annual rent or interest on the
principal sum. This mode Of quotation is
carried still further and the price of the
lot is named at the front which is the in
tercst on all the feet of ground which lie
behind that frontage This seems intli-
} cate, and certainly is difficult to state, but
may be easily comprehensive by taking
John Jones's case. His lot is worth $500
aud the interest is therefore ST. he has
Is feet frontage on the street, therefore
Sl2 divided by Is gives the quotation fol
the price OF his lot, which is 66 2-3 cts. pei
foot. As long then as John, his heirs, oI
assigns, pay to the aforesaid James Smith
G6 2-3 cents per annum for every foot o.
frontage that Jones rented or bought-fol
here the purchase on ground-reHt conveys
every right, title, and interest of a fee sim
ple-Smith cannot modest Jones in his use
and occupation of the lot The grouud
rent landlord may sell his ground-rent, a,
the tide passes from buyer to seller JUS
. like mortgage
Now let us examine Johns account witt
: the builddg association. He borrows 81,
000 in cash, agreeing to pay 81 POO anc
; the interest. He stands charged with 81
200. Paying $50 per annum, it woulC
take John twenty years to pay up 81 900
But at the end of the time, his shares be
ing worth 81 200, he stops paying and the
house is his own. In fact however, Juhr
is participant in the profits the premium
and the interest he pays going to reimburs,
himself, and it only takes in practice tel
, or twolvc years to put John in absolute
Lossession Of his home.
Estimating Ice to be worth half a cent ;
pound, or ten dollars ton, the lee crop o