Belmont chronicle. [volume] (St. Clairsville, Ohio) 1855-1973, 1888-05-31
RIILnING ASSOCIATIONS.
THE BIG DIVIDENDS PAID-THE MATTER
OF PRENIIUMS-ARE BIG DIVIDENDS
PROPER SUBJECTS OF CoNGRAT-

OF PRENIUMS-ARE BIG DIVIDENDS
PROPER SUBJECTS OF CoNGRAT-
ULATION?
To to the Editor of the Belmont Chronicle.
SIR-SOme of our county papers this
spring have pointed with seeming pride
to the dividends made by their respective
local Building Associations-so 0per
cent, some as high as 13 per cent. Most
enterprises might well feel proud of max
| ing such dividends to stockholders, but in
Building Association-a mutual con-
cern. whose supply and demand is entirely
within itself-is there really any occasion
for bOaSting of its big dividends, or, rath-
er, is it not an evil to be deplored, and
against the repetition of which active
measures should at once be taken?
We should stop to consider from what
source these dividends are derived. The
| principal and almost only source of profit
to the association is the interest and pre-
MUM paid by its borrowing members for
| the use of the money advanced them; so
| that, if we add to the annual dividend
paid the expense of the association for the
year, and also such amount as is placed to
the contingent fund. We necessarily have
as our result the amount paid by the bOr-
rowerS for the use of the money advanced
them. Or, in other words, if an aSsocia-
ton declares a dividend of 10 per cent,
its expenses have been per cent, and
per cent. is placed to the contingent fund,
then the borrower has paid 13 per cent.
for the use of the money advanced him.
Is this state of things Just and right? 1t
makes no difference whatever that bOr-
rowing members get the same dividends
on deposits as do non-borrOwerS, the fact
remains that these large and excessive
dividends are made off of the borrowing
members; and it is eminently fitting and
proper that these mutual savings and
loan associations, of and for the poor man,
established under a wise and beneficent
law, should endeavOr to right this appar-
ent wrong.
The borrower and nOn-borrower should
have no pecuniary advantage one over the
other. One is as necessary to the life of
their joint enterprise as is the other. One
goes in to save a portion of his hard earn
ingS that he may have competence in
the uncertain future. The other antici
pates the savings of years, that he may
enjoy at once the comforts and independ-
ence of his own home. Even if common
justice and law do not demand it, such
bond of sympathy should exist between
the members of a Building Association
that the one should ask and receive of the
other a reasonable return for the use of
his money, and no more.
How can this be effected so that uni
form rate of interest may be exacted, and
a uniform dividend secured? The pre-
MUM can not be abolished, because there
must be some source of revenue in addi-
ton to the lawful interest on which an
association can rely to meet its expenses
and losses, and to pay for the use of funds
it can not loan. a premium is all right,
but it should be fixed, specific premium,
and the plan with some associations of
selling its money to the highest bidder, or,
in other words, mostly to the member least
able to pay it, should be abandoned. The
association should then provide that the
annual dividend shall be 6 per cent on the
average amount deposited Tor it may be
fixed at per cent. or or 8 per cent J. and
then provide that annual earnings shall
be distributed as follows:
l. To the payment of expenses.
2. A reasonable sum to the contingent
fund.
3. To the payment of any shortage in
the dividends of former years.
4. To the payment of the regular annu-
al dividend.
). And the remainder, if any, to be cred
tied pro rata on the rates of the borrow
ing members.
If these rules were adopted and adhered
to there would be much clearer under
standing of the profit to non-borrower,
and of the cost to the borrower, and a |
more just and equitable distribution of
the benefits of our Building Associations.
X.