The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1895-01-28
AGAINST THE EXPENSE FUND.
Sentiment of Legislative Council
Representative HarrisOn's Views.

Sentiment of Legislative Council
Representative HarrisOn's Views.
Building and loan association legislation
was discussed at the meeting of the labor
legislative council yesterday afternoon and
while no action was taken, the sentiment
was almost unanimous in favor of an
amendment abolishine the expense fund of
these associations.
What do know about building and loan
associations?" repeated Representative Har-
rison, of Elkhart county, when asked con-
corning them at the Denison last evening
''The exact truth is know very little about
them and my store of knowledge on this
subject has been gained since my arrival at
the Capital My initiative impressions of
these organizations" continued Mr.. Harri-
son, were decidedly favorable ones. The
origin of the building and loan associa-
lions marked an important epoch in the
history of our financial institutions. Prim-
arily their objects were praiseworthy and
easy of understanding. They wero designed
to benefit people of small means. Their adj
vent was heralded far and wide with ac-
Carnations of satisfaction and their sub
sequent transactions were eminently just.
They proved so attractive to the common
people that small earnings which had been
stored in savings banks were withdrawn
and invested in building and loan stock
which offered the allurements of larger
profits. The societies first organized dealt
out exact justice to the whole people. They
bore the charm of great simplicity and
their literature disseminated the plans and
purposes of the organizations in such
manner as to be readily understood. When
the claim was made that certain rate of
interest would accrue to the investor on a
stipulated amount of cash, and specified
date of maturity of stock was vouchsafed.
the small patron, ill acquainted with mind
ness propositions, could possess his mind
with the happy assurance that the state
ments would be verified, and that the figures
would not be so adroitly juggled as to be
made to lie. This was the condition which
obtained when the associations were first
organized in the State Of Indiana Up to
about building and loan associations. In
fact the history of their transactions is the
history of the financial prosperity of the
State. Many beautiful cottages and cheer
full and happy homes stand as enduring
monuments to their beneficent influences.
They encouraged economy and frugality
among the wage-earners and elevated the
standard of citizenships'
What do you regard as the most OBJ
jectionable feature to the conduct Of the
associations in existence to-day?"
-, The \ s, prime and paramount objection us is
the provisions of the law enacted in 1885,
under which all the building, loan fund and
this State were organized, it was made
possible for INSCRIPTIONS and designing
men, acting upon the faith and confidence
and upright business principles, to engage
in speculative enterprises under that name
This law delegates to the incorporators al
most unlimited power in fixing their own
rules of government. 1t is left to the prov
ince of the bylaws to make almost any law
Of government desired and this power has
been grievously abused in many instances.
1t has opened the way for moneyed men TO
thereby escape taxation by the purchase Of
prepaid and paid up stock. It gives the
association the right to exact an exorbtant
rover under the guise of premiums. and
permits wild speculation in real estate and
loans to be made property in excess of
it's cash value. Look at the inconsistency
of the claims made by the different asso-
Citations. Here is one company which al
leges that it pays the investor 16 per cent.
dividend on his stock semi-annually. This
same concern claims that it makes loans at
an annual interest not to exceed per cent.
Where does the Z per cent. come from to
the borrower who pays that sum in prem
iulns which in all cases must be added to the
interest, but which he is induced to overlook
by, the Establishments of tie officers It is
only the money loaned which has the ability
to earn. Inactive funds yield no profit. 1t
is interesting to note the earnings of Indi-
ana building and loan societies for the year
1894 computed from their reports
Have you the figures at hand?" was asked
him.
Replying. he said he had but did not care
| to give them until further verified.
Inc statement Uldue DSlOfe TIE cOliiiill-
| tee by a member of loan company the
| other day. said Mr.. Harrison. was erron-
eous. The expense of loaning the money
| was given at a trihe over per cent. when
| l can prove that It was more than IL per
cent The whole fight Is being made on
expense accounts. The companies are will
| ing to have prepaid and paid-up stock taxed
| but they are very sensitive on the subject OF
| their expense accounts. The question will
receive the attic ntion of the Legislature this
week and some facts will be brought out
which / think will prove salutary in this
connection.
There is another feature III connection
with this subject which seems 10 have been
| overlooked. The building and loan associa-
| lions by a guarantee of big rates of interest
| have attracted Investments which should
| seek other avenues of earning. What in
| ducement is there fer the investment of cap
| ital in real estate when more fruitful field
| is offered? ] sometimes question the value
| Of the loan societies to the State. Money
| has been attracted into a new channel and
| its diversity of investment has been de-
| creas ed.
| zone of the arguments used In favor OF
i building and loan societies is that not one
1 of them failed during the panic, while banks
| were crashing on every side This is q
| silly argument when it is understood thai
funds invested in these societies cannot bt