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

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ardous- however, to advance money upon pros
pective improvements. so that the associations
are very careful and strict in dealing with such
loans, and In some cases decline to make any
advances where there is possibility of q lien
being placed upon property SO as to jeopardize
the interests OF the association. 1t is possible
for man to buy house through an association
without any cash margin, where the original
owner will enter into an arrangement such as
has been made in certain cases. For instance. II
house Is worth %, 900 the association advances
81, 200, taking deed of trust upon the whole
property, the remaining $500 due the owner on
the house being secured by a second mortgage
When the borrower has paid off enough Of his
Indebtedness to justify it the association paws
the $500 and then becomes the sole creditor of
the borrower. The method of operation of the
two chief types of building associations have
been described above. There are other varieties
of associations differing in some of their details
from those described. or combining features of
both the old aud new styles.
BUILDING ASSOCIATIONS AS SAVINGS INSTITUTIONS.
The associations have been regarded so far
chiefly in their capacity of loan institutions.
They are important likewise to the community
as savings Institutions. of" said an old build
ing association man to STAR reporter, '-you go
into building association, stay five years. and
don't get cent Of profit, you will be doing
well, doing better than If you were not In the
dSsUCidtioi. Inc SyStematlC
saving of small! sum every month amounts to
great deal in five years. You will say that
man might accomplish the same thing in bank,
but he won't. He can draw his money too
easily out of the bank. and there Is nothing to
compel him to continue his deposits when his
resolution flags. In building association,
rather than jeopardize his previous deposits he
will continue his monthly payments. 1t is true
he can get his money, but it requires little
more form to draw it than the mere signing of
check He has to give months notice that
he wants his money, and probably before the
month expires he will have provided for the
necessities, actual or supposed. which induced
him to ask for it. The more money he
accumu!ates in building association the
more punctual he will be in making
his monthly payments Take the cases OF 100
men who join building association. and 100
men who begin to deposit savings in banks. I'll
venture to say that at the end of four years not
more than one man out of the hundred will be
still keeping up the deposits in bank while
forty or fifty Of the hundred in the building
association will still remain"
1.-The depOsitOr In savings bank" continued
the speaker, "or In any banking institution, has
no voice in the management of the institution.
He is not entitled to any statement of the affairs
of the bank; he does not know where the
money is loaned, or whether $50, 600 or 800 900
may not be loaned to one man. In q building
association the depositor or stakeholder is not
only entitled to know where the money is being
he can see just where it goes. 1t is in that that
the safety OF the building association lies. The
failures of building associations when compared
with the failures Of other institutions holding
peoples money, have been very few. The fail
ure OF the Republic and Territorial building
associations here was due as much perhaps to
incompetent management as to dishonesty.
Another feature distinguishing the building
association from banking institution is that
there is no chance for absolute failure. A bank
m or faf hmm ..f ,l, - An.
dishonest president or cashier can ruin bank
for mole than double the amount of its capital
1t Is not within the range of possibility for q
dishonest officer OF a building association to
more than partially impair its capital. In the
case or the Republic association the stockholders
had paid % months, and bad management and
dishonesty had only impaired its capital % per
cent. A dishonest cashier of bank could in
far less time have involved a bank to twice the
amount OF its capital. The building association
requires that its funds be Immediately invested.
The monthly payments are at once loaned out.
There is no opportunity for an officer to appro-
pirate more than certain amount, which.
unless the association is very carelessly man
aged. could not exceed the amount received in
one month. In our association one of the pre-
cribed duties of the finance committee is to
figure out beforehand the probable receipts each
month. II there was any great discrepancy be-
tween the estimated receipts and the actual re-
ceipts. an inquiry would be made at once as to
closed once month There is nothing in the world
that prevents wrongdoing like a competent
finance committee, well paid. In the long run
1t will be fOund that there is no money better
invested. Most of the associations now adays
maintain paid finance committee"
THE BENEFITS OF BUILDING ASSOCIATIONS.
''The building association" he continued. sis
very frequently the beginning of mans thrift
in the world, of his accomplishing anything in
the way Of acquiring property. l can name
many well-to-do men now who will say that if
they hadn't begun taking stock in an associa-
ton they wouldn't have hada cent in the world
The building association makes good citizens
You will find that the class of men who make
monthly payments into building associations are
sober. reliable, industrious men. The practice
or saving regularly every month. establishes
habits OF economy, and prompts many to save
and acquire property who might otherwise not
live within their incomes The building asso-
citation does not compete in any way with any
banking institutions, except. perhaps. savings
banks. The general banks have their functions
to discharge in the community, and they are
functions which building association could not
undertake. The building association is designed
particularly for persons OF limited means and
offers no Inducements to capitalists to make
large investments. l have had men ask for the
privilege OF putting $1,000 or $4,000 into our
association, but they have always been refused
for the reason mainly that We would not want
to subject ourselves to the possible embarrass-
ment or interruption which might be caused by
having SO large sum withdrawn at one time.
The association is intended for small investors
1t benefits its shareholders in more ways than
by merely affording a means of saving We
protect our shareholders in every way If he
wants to purchase house. he gets the benefit
OF the Judgment ofthe valuation committee An
inexperienced purchaser is not likely to be
Wronged in any transaction made through our
association. The more fully the plan and merits
OF the building association are understood the
more Clearly one can see the benefits which
shareholders enjoy"