Frostburg mining journal. [volume] (Frostburg, Md.) 1871-1913, 1890-01-18

dCCOuul DIS lOllOWS
To shares redeemed in advance....S 5000
" interest SyearS. rS................... 374.4O
" amount. ..........Sl ,l54,4O
By dues, 4l6 weeks. .........S6 S624OO
dividends. ....... l72.H
Net cost of $3.50 for years. 1851 As
Divide $357.71 by s.
Net cost of $3.50 for | year. -. ......S44. SO
"a fraction over 81 per cent. per annum.
The mortga@Or, moreover, may take
into the account $lO.45, entry and
mortgage fees paid by him, including
interest, 1901, total $l5.46. and his
loan will still cost him less than per
cent.
All this fayors the borrowing stock
holder, considered apart from his rela-
tons as such to the a Association. His
accumulations are com pounded-in the
JOURNALS judgment for years the only
error in the scheme. The stakeholder
whose operations we have illustrated
made $2i 1872 from this source alone.
But its tendency is bad in two-fold
sense. By exaggerating the basis it
forces the rate Of distribution below the
stockholders favo1ite figure 6, and
suueezes expenses to points under a
reasonable rate OF official compeusa-
ton. We're the division based only on
the actual payments Of dues. rs it
ought to be. the rate of 6 per cent.
could be maintained and widel mar
gin kept open for those vino III the very
nature of things now do considerable
work FOR nothing.
lu answer, therefore, to the question,
often raised in oar hearing-how a
financial institution. with no resources
of consequence outside of 6 per- cent.
can make e per- ret. we point to the
expense account, and challenge the
citation Of u similar organization with
IL capital of $40. 600 that is run for less
than one-half Of one per- cent. of that
sam, The dead money Of three stock
holders whom we could name, 81, 100,
earns more than the live saarled
officers. The three stockholders did
nothing but draw their interest, yet
got more money than two officers who
worked for the 4 association all the
year
1t ought to be understood, therefore,
that the Association success AS Il
dividrnd-ra paying institution depends
essentially Hnop being run at the least
possible expense. No man san con
duct It's business properly whose en-
piOVnlent otherwise is eXactlug of time
and labor. and the Association cannot
place its work profiahly under auspices
that must depend upon OTHER lahot FOR
income.
But 1t has reached u stage where it
can easily make the departure sug-
gested-to divide profits solely upon
;
essarily the treatment each share re-
ceives for its first years work it de-
serves no more for any other years
work. and where all are served alike
no injury results. In effect, there
would be little change the Association
has at the end of the year a given sum
! to divide-nnly V so much, no more. II
it be divided by any arbitrary ratio,
each share will get Of the whole what
its cash credits entitle it to--uo more,
40 less. Ii the basis be capitalized at
the highest figure by including the
compounded accrerions, the rate OF dis
tributon must go to the lowest if the
accumulations be dropped from the
dividend-bearng fund, as they ought
to be, the rate will rise correspondingly
And then, as now, the scheme vii
rank among the foremost for financial
cooperation among poor people thai
has ever been devised, 1t will furnish
II profitable depository tor savings OF
]
/ the one hand. and an available loar
resource on the othcr-.in other words
Il complete system OF small deposits
small loans and small re-paymcnIS
It's members. whether lenders, or bor
! rowerS. will cuntlnnc to do collectively
/ what they cannot possibly do as indi
viduals-pool their savings, 50 tha
each may profit by rapid turningS %
the cash centralized by one class fol
the accommodation Of the other. eaci
sharing alike in the outcome.
A few words Of detail in conclusion
Nine directors have charge of the
Associations affairs. two Of whom. the
secretary and treasurer. are salarlcd
the others serving without pay. The
share redeemed in advance must pay
40 cents per week, 10 cents OF which
are interest. If the profits were no
divided it would take exactly 10 year,
of weekly payments to mature a share
but experience has already proven tina
payment without default and equabl'
division of profits reduce the life of Al
incomplete share practically to abou
I years and 10 months. Defaults
however, tend to delay maturity. Fo