Arizona weekly citizen., 1890-12-06
BUSINESS Some Interesting Facts are
 Pres nted. ON A VERY PROMISING And Beneficial Institution i'll Our
 Midst. The Building and Loan Association. Some Facts About the Rules and Regulations Which
 Govern it.
ON A VERY PROMISING
EDITOR CITIZEN

with us in Tucson, novel institutions
 and the principles upon which they ar'
 based are so little understood by mos
 of our people, that, with the hope of d
 least melting inquiry into the subject
 your correspondent ventures to throw
 out few practical observations on the
 method, and workings of our own SO
 cIety.
 The subject is too extensive to enter
 into a discussion of details of the mOdUs
 operandI in this short communication
 and it will the efore contine Itself to a
 statement of ths advantages and disad-
 vantages offered to share holder who
 borrows from the institution.
 On one share of stock in the Tucson
 Building and Loan AssoclantIon
 the value of which at maturity
 is s200, the borrower can obtain
 upon surrendering the share of
 stock itself as collateral, and giving
 other security. to be approved by the
 building committee of the association, a
 sum equal to the value of the share at
 maturity, less the highest premium offered by intending borrowers at a meeting of the association. For ex- amplesif premium of $50 is offered, the
 borrower receives as a loan S15O per share. Now he is required to pay in
 terest at the rate of 10 per cent per
 annum, not on the amount actually re- celved, but on the full face value of the share at maturity. Thus in this case
 he is required to pay 10 per cent per
 annum not on SI50, which hs actually receives, but on S300, the value of the share at maturity. In addition to this he must pay sl per month as dues for the share. Hence the borrower will have to pay monthly g. 67 per share unti, the share natures, aS which time his in debtedness to the association will be cancelled.
 Furthermore the bylaws of tho asso- citation provide that tle borrower can repay lis indebtedness to the associa- ton at any time before his shares may have matured but make 10 provision for the refunding to the borrower of any part of the premium, which s5 a maCtar of fact, has been paid before hand for the entire length of tine that it may take his shares to mature.
 Here then is a defect which surely should be remedied. Say, for example. that Mir. 4. bUrrogs on his five shares of stock, ST50, giving as premium S250 or $50 per share. At the end of one year be has saved sufficient money to pay his or has an opportunity Of selling his property. No" i- order 10 iquldate his indebtedness to the asso- citation he viii hare to pay tte entire sum Uf 5000, or 5250 more than he re- ceiged In addition to this, he mas al- ready paid 10 per cent Of slCJ0 or Sl00 as interest. In other words, under the present bylaws of the Tucson Building and Loan Association, he b required to pay 33J0 for the use Of S7J0 for one year or S46.67 per cent per anuum. Is this just or right? Say that some one else who has paid premium Of S75 per share on five Shares-and several bor- roweTs have paid as much-desires to Cal eel his debt to the association at the end of the year Shal he be made to i pay S475 for the use of S625 for one l year, CT 76 per cent per annum? Is thls l not usury, and worse than that, ex- tortion?
 Some people however will say, be bor- | rowed the money for as long a time as it would take the shares to mature and ! he should retain the loan until that | time. in order to reap the benefits of the | Any one urging such a | statement clearly says; Oar associa !! ton IS intended to benefit only these | who are too poor O. unan bilious to hope | to save more than the meagre sufficiency | to pay the inter st on theIr loan ard the | dues on their hares, for they are ena 5led to pay theIr debt in small install ments To the enterprisIng and econo- mical man, who may gather means long before hIs shares Of stock mature, We offer no inducement."
 With such a doctrine, how long may our Association hope to prosper, how long can 1t hope to live? Only so long as there are amongst its members, the we'll to-do to loan the money, and the very poorest class to borrow 1t. For as soon as enterprislng men realize the lnjust- ice to which they may be subjected, by 1 this omission in the associction's by laws, then will they refrain from borrowing or even from becoming members.
 Now this deficiency has its remedy | and all the best established associations have forseen and provided for the diff ficulty.
 All associations Of this character are composed ot two classes of members, namely the lender and the borrower. The interests of these two classes are by no means incompatible, hence they ought not to be in confict, nor should one attempt 10 gain undue advantage | over the other. The lender or rather the non borrower procures . reasonable interest on his investment, and if the as sociatiOn gives him this be should be the borro yer on the other hand seeks from the association accom- dations which he cannot obtain from money lenders outside of the association and if this are afforded him, he should be | content. That association will there fore attain the most success, which of fers the greatest advantage to both of the two classes of members which con- pose 1t, and no association can prosper which offers a decided advantage 10 one class of its mem Ders to the detriment of | the other. Here then is serious diff ficulty which the Tucson B. & l.. must face and overcome before 1t can hope 10 be a success.
 In order that your correspondent | may not be accused of creating mal- ady withou at least suggesting a rem edy, he ventures to offer the following as a means f obviating the above men toned difficulty.
 Let the bylaws of the association be so as to provide that any mem Der may repay his indebtness to the as sociation at any time before maturity of his shares, by paying the amount which he received from the association plus so much more, as added to the in- terest which he has paid up the time of lioUidatiOn. will aggregate to the as l