The Hawaiian gazette., 1890-04-01

ANNS4 o4St dAS es>c.S hN0 WI W 80
association. Every member is emit
tied To ask for loan equal TO the
amount Of his shares at par value.
For example, the owner of five
shares (par value 500 each, or
$1,000 can seek Of the association g
S1.0O0 loan. The holder Of ten
shares, $1,000; twenty shares COM
msuds S $1,000 loan. etc.
The loSns made sire psid back
again by the borrower TO the ssso
citation, by his monthly subscription
dues. The interest also Is settled
monthly. For example: An owner
OF ten shares (the mstured or par
value of which Will be $1,000 Dor
rows 5000 of the association. Each
snd every months payment OF his
subscription Of 81 per share s month
SO for slD increases the value Of
his shares by just so much. Every
dollar psid into the treasury on his
shares Is direct debt on the part OF
the association TO him. When our
borrowers ten shares shall hsye
resched par value, through his
monthly payments, and through the
earnings OF the association, then
the association is owing him full
$1,000. which is Just the amount OF
his Indebtedness 10 the association
This interest having been settled
monthly. Then there is mutual
cancellation OF debts, the shares in
volved being surrendered to the
association. in lieu of the assoeis-
tons releasing all claims upon him.
This transaction will then throw
him out of the association entirely,
unless be has other shares not in
volved IN this transaction. There
fore. though the borrowers debt re-
mains one definite, fixed amount all
the time, it Is practically decreasing
month by month IN the ever increas-
ing value of his shares, which repre-
sents the corporations debt TO him
To & man. who hiss been obliged TO
pay 8 monthly rental for his home,
and who. at the end Of ten years,
finds himself no nearer TO owning Ii,
than at the beginning, this system
proves Of exceeding value. That
which was q monthly payment OF
rent before. now becomes g monthly
installment for his permanent pos
| session of home. 1t would seem as
/ If it would take very nearly two hun
/ drei months. at the rate Of 81 per
share per month 70 pay up from for
a mstured share Of 500. In point
OF fact it has proved again and
again that il really takes only about
one hundred and twenty months, or
ten years, for stock to become at par
value. This leads Us to consider
the subjects of earnings and e1-
peuses Of such associations.
The expenses are very light, being
only for such stationery, pass-books,
etc. as may be found necessary, and
a small salary to the secretary. The
secretary is the only paid officer OF
the institution. The president, treas
urer. and directors render grstultous
services. The borrowers are re-
ouired to pay al expenses connected
with their loans. In many assocla-
tons. there Is no Office rent TO pay.
All members are accOmmodatlngly
cooperative, or comparatively accom-
modsting.
The earnings are chiefly from two
sources. First A moderate rate OF
interest per annum is charged upon
al loans made. Second. The high
premiums from borrowers, for the
privilege of obtaining the loans. The
premium is paid for the purpose OF
| deciding who shall have the money
first. st the end Of each month, as
there may be number OF appllca-
tons on hand from members for
loans. in order that there may be no
partiality shown to one over another,
| the funds in the treasury are auc-
toned of at the monthly meeting OF
the members to the highest bidder.
He who needs the money most, as is
shown by the highest premium
| offered, gets the loan. Mr.. A, an
owner Of ten shares, bids for $1,000,
and secures the loan to himself at
say a premium of 20 per cent. He
| therefore ICNSlhC1 DON TA.CCO IL
actual cash. However, he makes his
mortgage for and pays his monthly
interest upon, the full $1,000. At
| first it would seem as II this were
greatly to his disadvantage, but it Is
claimed that be, as a member OF the
Association. eventually receives the
premium al back, through the earn
ings OF his shares. The high pre-
MUM goes into a common fund for
the benefit Of all for reinyestment lat
another high premium) and thus
constantly increases the value OF his
shares so that he is getting steady
and sure return. Paying only the
moderate interest required would
necessitate about fifteen years to pay
of his full loan OF $1,000, whereas
his premium of 800 and other high
premiums being loaned out again
aud interest compromising, viii pay
of his loan ii about ten years.
1t has been found from experience
that q loan from such an Association