The Washington times., 1894-11-27
REMEDY AGAINST FRAUDS
Government Inspection OF Local
Building and Loan Associations.
HONEST COMPANIES FAVOR IT
Dishonest Corporations Would Suspend
Operations if Thoroughly Investigated
Expressions of Opinion by Well-known
offcials-safeguard are Needed.

Honest companies would not fear an off,
cial government inspector; but dishonest ones
would not only stand IN dread Of such an
officer, but would probably, suspend opera
tions if thoroughly investigated From both
OF these points Of view I regard an inspection
not only as necessity, in the light Of busi-
ness requirements, but also as public bene-
factor. What more could you want than that
place should be created and filed by man
who would be a necessity and a bene.actor?''
These expressions Of opinion were IN reply
10 the question by TINES reporter yester-
day to a building and loan association man
whether il would be desirable for Congress TO
provide for the District an inspector with
power TO inspect and examine the books OF
building associations and similar corporations
doing business in this city, on the principle OF
the examination aud inspection Of national
banks.
Ii is well known that here. as in all other
cities, outside corporations, who are not
obliged TO take OCt charters in the places
where they do business except at the home
Office, have agencies take the name OF
building and loan associations. Some
of these are bona hde concerns, while
others are shams. The local building
and loan associations, the co-opera-
tive concerns, which are vouched for by the
reputation OF those at the head OF the aaairs.
regard the foreign element rs "A just ground
for criticism and have, in fact, criticised
them severely.
The remedy against the preparation Of
euch frauds upon the public, in the opinion Of
representative building and loan men, lies in
the passage Of 4 law by Congress creating an
inspector for the District and containing such
provisions as will put the whole business.
local and foreign. on the same sale basis.
0Ir John JOY Edson, secretary Of the Co
iva
yesterday, speaking on this subject:
There is no doubt that il would be good
thing if q building association law were
passed by Congress which would provide for
regular sworn statement 10 be returned 70
Ii proper authority, and examinations made
similar TO what is required in the national
bank law. l have always been in favor Of it,
and would long since have prepared a bill 10
be introduced in Congress if 1 had believed
there was a chance Of securing its passage.
The difficulty in obtaining such 2 meas
ure would be that we have no representative
in Congress and the apprehension that we
wouldn't be able to secure as good bill Is
they have passed in other States. Maszachu-
sets. New York. Pennsylvania, Ohio. and
other States have such laws under which the
associations are chartered, and are subject 10
government supervision. L don I think there
can be any question about the desirabillty Of
similar laws n the District Of Columbia
Mr.. j. w. WheIplny, president Of the East
ern Building and Loan Association, said:
Yes / am in favor Of the legislation YOU
refer TO. and the more safeguards you can
get in such matters the better l would like il.
II the inspector shall be thorough in his
work. and especially in the examination OF
the affairs Of q company. L would say it would
be good thing. Several States have such
laws, and believe they operate benehcially
TO all concerned.
MY idea, however, is that It would be bet
ter TO have the corporations IN the District Of
Columbia placed under the supervision of the
Comptroller Of the Currency. as the District
Of Columbia is under the general government.
I an decidedly in favor Of an inspector and
make my suggestions merely as a suggestion
and as one whereby the same object might be
attained as by an inspector"
5Ir. John Cook. secretary OF the Perpetual
Building and Loan Association. while favor
ing the general proposition, said:
''To secure all that is desirable there is
something more than an examination re-
quired. The mere facr that an inspector says
that the accounts Of a company are correct
does not secure all that is required. Accounts
may be kept correctly and vet not be what the
stockholders would approve. What is required
Is TO see that the money Of these associations
is properly applied. There should be a
stringent law as TO the expenditures which
associations are permitted TO make. limita-
fiOn 10 the disposition Of money that affects
the stockholders.
but, as I said, there should be a govern
ment officer to inspect all accounts once
month. And / would be in favor Of a urO-
vision in the law that il an inspector discOv-
cred that a scheme was not a sound one ne
should have the right to suspend its opera
tons. Every association, I think, whether
local or foreign. should so conduct its busi-
ness as that il should be ready for the most
rigid inspection"