Turner County herald. (Hurley, Dakota [S.D.]) 1883-19??, 1890-01-30
Profitable Savings Bank.
BUILDING AND LOAN ASSOCIATIONS.

The earliest authentic information
we have on building and loan associa-
tions is obtained from II work published
by Henry A. Davis, of London, Eng
land. who tells us that in 1881 an asso-
citation was formed in Birmingham for
the purpose of enabling its members to
build or purchase dwellings, and pay
for the same by monthly installments.
The rules or articles of the association
were very similar to those in use by
American associations of the present.
The scheme of the modern building and
loan association is explained in the
Building Association and Home Jour
nal in this way:
A number of men, each able to save
a certain sum. say two dollars month,
agree, in order to strengthen each to
save, on certain day of each month to
deposit this two dollars in a strong box
until each mans share is worth two
hundred dollars. 1t is easy to see that
il each man is prompt in his payments
that the box will be ready to be opened
for division of the savings in one
hundred months.
But let 1t be supposed that the men,
bers agree that instead of allowing the
money to lie idle in the box that they
put 1t out at interest each month put
ting the securities for the money and
the interest in the box as fast as loaned.
| They Gun see that in this manner they
can shorten the time to the opening of
box, and u division of the money. We
now have a purely cooperative savings
fund OF building association with only
one distinguishing feature-the savings
are compulsory and made at stated
| periods. The association having deter
mined to loan its funds, its next step is
to appoint boaad of directors from
their members to see that the money
loaned is replaced by good security. AS
real estate is the basis of all local secu-
rites they decide to loan on nothing
but real estate, and to make the rate of
interest SO low that the demand for
their savings will be such that they
will be able to get security of many
times the value of the loan. Now, it
appears that one Of the members of the
association desires a loan, and in addi-
tion to the real estate security required
by the board of directors is willing to
hypothecate his interest in the strong
box as additional security for the
money. The directors see that this
would be a very desirable loan as the
applicants share of the money in the
strong box is increasing each month,
and at the end of the period will repay
the loan. We will suppose that another
member also desires loan and there is
not sufficient funds in the strong box
to accommodate both members. The
security is equally good and the board
of directors are in Il dilemma as to
whom to make the loan until it is sug-
gested that the heapplicants bid for it one
against another, and the applicant who
is willing to give the highest premium,
over and above the fixed rate of inter-
est, gets the loan, The board of direct
ors then decide that in the future they
will make loans only to members of the
association and in that case they get
additional security that will at the end
of the period repay the loan, Another
member, a new borrower, finds he is
unable to keep up his payments, or he
desires to move to another city; to ac.
commodate him the directors agree to
open the strong box before the appoint.
ed time, give him what he has paid In
with a reasonable amount of interest
for the time the association has had the
use of his money.
1 Now it is seen that there are. besides
saving money and getting lnterestnpon
it several sources of profit, namely
Premiums arising from competitions
for loans, penalties for the non-paymen,
of dues, and a portion of the profits
withheld from members who withdrew
and whose stock is cancelled. at last
between sixty and seventy months. ant
when from Sl2O to $l4O have been pait
in on each share, the strong box is
/ found to contain securities and none,
sufficient to divide and give each mem
Der, borrower and non borrower alike
two hundred dollars. The time ha:
come for the association to be wound
up" each holder of an unborrowed OF
free share gets the two hundred dollar.
cash. Each borrower is entitled to hi.
bond, and the account is squared by tn,
cancellation of thelmortgage. The Dor
rover finds that he has paid off his loar
by installments and not paid an exorbl
tant rate of interest for the privilege
We will suppose he had five shares
which entitled him to loan of on,
|, Thousand dollars, and he has paid 81,
per cent interest and premium o
seventy cents on each hundred dollar
monthly. He finds he has paid the as
sociation thirteen hundred and twent,
dollars in sixty months. He had in tn,
beginning one thousand dollars, leav
ing three hundred and twenty dollar
he has paid the association for the us
of one thousand dollars for five years
FINANCIAL STATEMENT
Ofthe condition Of the
: Hurley Building and Loan Association
, December 3lst, 1880