The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1895-09-06

.S12,799,O4O 90

Thus it appears that the building and loan
associations OF the State have gross assets
amounting to more than $21 500 900. They
have loans outstanding to the amount of &c.,
77S, 666 DO, for which they hold securities TO
the value of $36,553, 601 81.
During the past fiscal year these associations
have collected from their members in dues,
interest, premiums, loans repaid, deposits,
ETC., 81 Alb ,343 SO, and have borrowed from
bank on overdrafts and bills payable 81 ,l54, :
$40 20. They have disbursed in new loans OF
the year So $50, 097 Sc; have paid out TO re-
firing members "a O74 1873 "a, OF which $780,
097 70 represented profits, and they still hold
a balance of cash on hand amounting to
1856, 434 81.
The aggregate net profits of all associations
for the fiscal year were 81 1906, 1876 66, which
amount to 6.46 per cent on the average capital
loaned out
Besides the large profits paid out during the
year, the associations still hold accrued earn
amount of "a ,743, $50 &C. In addition to this
there are unearned premiums and reserve
funds of $500, 1853 25
Taken as whole, the building and loan asso-
Citations have enjoyed great prosperity, and are
now on a most substantial basis. But there are
some notable exceptions to the general rule to
which the Commissioners call attention in a
pointed way.
1t seems that there are eighteen associations
in San Francisco which were defrauded through
man named Lander, who operated extern
moter, and then departed for South Africa.
LANDER was on the boards of directors
of a number of these associations and
he schemed large number OF loans
through them on insufficient security. On
these loans the associations have had to
take a great deal of property, either by fore
closure or compromise, and then stand the
shrinkage in value. The Commissioners figure
I'D that the eighteen associations named will
lose altogether over $133,OOO through these
deals
This makes formidable array of losses. All
the associations affected, except two, had a
sufficient accumulation of earnings from
which the losses could be dedu cted without an
impairment OF the original capital paid in
Some suffered only slight shrinkage in book
values or none at all, while others were obliged
to scale down all profits previously appor-
toned, paying back to retiring members only
the amounts previously paid in by them
None of the associations were forced into
liquidation, though two would have been
obliged to take that course had not their men,
bers voted TO meet the losses by scaling down
the book values of their stock below the point
OF cash actually paid in. We have deemed 1t
best to make a complete exhibit OF this bust
ness, to the end that the full extent OF the dis
aster NAV be known and all associations fully
warned of the evils resulting from such meth
DDS of loanfng.
The responsibility for this state of affairs
rests primarily with the officers of the associa-
ton charged with the duty of transacting the
business. The presidents, secretaries and
treasurers must bear their share of the blame.
The appraisement committees were at fault in
overvaIuing the properties to be loaned on.
The attorneys were at fault in number of
instances in allowing loans to be made
faulty titles, or upon no titles at all. And,
finally, the directors were at fault in trusting
the entire business OF the association to one or
two men, and not themselves carefully scruti-
nizing every transaction to ascertain that their
associations were adequately protected. Nearly
all of the loans in this category were made be-
fore the existence of the present commission.
The mischief was done when the loans were
made on insufficient security or upon faulty
titles. 1t required time to develop what the
losses actually were, and, at The. earliest
OF the same, and have done all in
our power to secure readjustments and
protect the interests of stockholders. We wish
to emphasize the fact that neither this CON-
mission nor any other that could be appointed
would be able to protect associations from loss
in making bad loans. Every association in the
State might make bad loan on a given date
and we could not prevent it, nor would we be
advised of the fact until months afterwafd,
when an investigation of their affairs would
take place. The State cannot appoint COM
mission actually to transact the business OF