Evening star. [volume] (Washington, D.C.) 1854-1972, 1884-10-11

III.
unaccustomed to dealing with money in the
light of the rule of partial payments the
rate OF interest paid in many cases will ap-
pear extremely low. When it is considered
however, that the borrower after he has paid
back three-fOurths Of his loan continues to pay
the same amount Of money. or four times the
same rate of interest for the remaining fourth
the prospect is not so alluring. That has been
urged as an objection against building associa-
tiOns, conducted on the old style, but In prac-
tice persons familiar with the workings of the
associations. and who have some skill in finan-
ciering, manage either by settling their debt to
the association by full payment or transferring
their debt to a new association to greatly lessen
their burden. 1t Is custom among some bor-
rOwers to retain number of shares not adj
vanced upon, which, as they gradually increase
in value, are used in extinguishng the debt
owed to the association. Taking the extreme
case. however, of a borrower who makes no
provision for settling his Indebtedness to the
association. except to continue his monthly
payment OF q on each share advanced upon
until the association is dissolved it is MAIN
tanned by building association managers that
even in such case the terms on which the loan
Is obtained are advantageous TO men of small
means with regular incomes. The same loan
could not be obtained from banker or broker
on very long time to be returned in such small
monthly instruments, though the loan might be
obtained by one able to repay more rapidly and
in larger sums at what would really be a lower
IA e of interest. The building association
makes it possible for poor man to borrow
money on conditions of repayment which does
not seem to him oppressive.
GUARDING AGAINST IMPROvIDENCE.
An element of human nature Is taken into
account. 1t might be urged that the borrower,
by saving small monthly sum, SO that he
would be able to make larger payments at
longer intervals of time, could accomplish
better results outside of a building association.
1t Is common experience. though. that large
debt to be settled in the distant future does not
project very strong influence into the calcutta
tons OF the present. In other words, the i'm
providence which is a rule among men should
be taken into consideration. in any comparison
between the methods of a building association
and the ordinary modes of borrowing money
and settling loans. One fact in favor of build
ing associations is the comparatively small
number of foreclosures made by them to en-
force the settlement of claims. One association
IN this city, managed on the modern eouit-
able plan, and which is net only the largest
association in the city, but the largest In
the country, has, during an existence of five
years. although its loans have amounted to
Sabo.WO In Sums averaging Sl.l00. sold out
only one borrower under deed of trust
A few years ago Judge Wylie enioined sale
about TO be made to enforce the claim of build
Inc association against a borrower as if ap-
peared to him that the terms upon which the
loan was made were oppressive, and that the
settled. In delivering his opinion, he made a
remark that he would grant an Injunction
against any ASSOCIATION under the same circum-
stances. Other persons, encouraged by the sue
cess OF this application to court by borrower
sought In the same manner to tree themselves
OF their debts to associations. 1t turned out
however, that In the first case. by reason of
mistake or overcharges. inequitable claims were
urged against the borrower. In the next case
brought before the same Judge the pretensons
To no iptj ,pf ian,
were so clearly shown to be unfounded that his
PRAYER was dismissed at once.
THE NEW OR COOPERATIVE PLAN.
During the last seventeen years the co-opera-
tive plan of building associations has been deyel-
oped here, and its popularity has been proved by
the rapid growth of the associations formed
upon that plan. The serial feature has also been
introduced Into the associations. The term CO.
operative applies especially to the feature of
permitting the borrower to share in the general
profits of the association the same as the non
borrower In this sense many of the assOcia-
lions conducted on the old plan are now COOP
eratiye also. they now credit the borrower
with his propOrtionate share of the profits The
''co-operative associations differ from the "old
style associations in fixing the nominal value
OF share al $1,000 and making the monthly
payment on a share 50 so. When q shareholder
obtains an advance. the premium which he Of
fers is added TO instead of being deducted from
the amount Of the advance Each year the
amount paid monthly On account of the premium
offered Is reduced 10 per cent, which does away
with the old objection urged anainSt the old as
sGciatiOns that a man is REQUIRED to nav the
same amount of interest after he has reduced
the principal of his debt The highest number
OF monthly payments required is 81 or So when
the advance will be cancelled in full and re-
lease given, whether the association continues
In existence or not. The number of monthly
instruments is lessened the managers of such
associations claim according to the time the
ADVANCE is taken out after the issue Of the
stock and the amount of accrued profits
lie serial plan is combined with these features.
At Intervals. generally OF six months 4 new
series of shares is issued. The advantages of
the serial plan are that it brings in at intervals
n new class OF borrowers and investors and per-
sons who have been obliged to surrender their
Gu shares Tor any cause are enabled to begin
their monthly savings again i'm the new issues
In some cases the ''oid Style associations &C
compllSh the same results by organizing new
associations from time TO time. the new associa-
tons thus formed, bearing the name of the old
one with the additional designation Of No 2
No 3, No. f. &c. as the case may be- The
shares OF the cooperative associations mature
l3O months, or 10 years from issue when the
pan provides that the shareholder will re-
celVe IN money the value of his share which
will be equal to the $500 he has paid into the
association in monthly dues together with
accrued profits. 1t at any time before ma
turity the shareholder Withdraws from the
association. the amount he has paid in will be
returned TO him with interest at or 5 Der
Cent the rate OF interest varying in different
associations. No interest however will be paid
II the shareholder withdraws before his stock is
wear old. In the ''Old style" associations the
rate OF interest paid to withdra wing sharehold-
ers is. as rule. per cent but generally no in
terest Is paid to g. shareholder Withdrawing
during the first two years of the life Of the asso-
citation.
HOW LOANS ARE OBTAINED ANDREpAID
member Of cooperative association is en-
titled to get an advance of 81, 900 for each share
he holds. He may take slO0. or any sum in
even hundreds, not exceeding the nominal value
OF his shares. The premium bid is added to the
principal and the whole is divided into 100
monthly installments. Thus assuming that the
premium bid is 66 per cent, the monthly paw
ment required on an advance of 81 600 would
be determined by adding $500 to $1,000 and
dividing the sum by 120. This would amount
to 1888 OF this sum IS IS or 1-13oth of
Sl-o0O would be credited on the account as ire
turn of advance" aad s.. so Is premium Now
the shareholder wOu,d have to continue to paw
his regular monthly dues OF 81 80 on his share
OF stock, so his entire monthly payment would
amount the first year to sl6.3S. Each SUISSE
quent year the amount ofthe monthly payment
Oh account OF premium would be reduced SIS
cents or ten per cent. His entire Indebtedness
to the association to be paid in years and 8
months would be 81. 1913 80. Upon this sum he
WOuid be or, ditpd with his at ha ,rofits