Arizona weekly citizen., 1895-05-18
NATIONAL LOAN ASSOCIATIONS.

| N A A0Nk2A 4s0<2xN <2SSS 1<& - AO>s -
 From the beginning we have been op
 posed to the system of national loar
 associations, for the reason that the pro
 misses made and the security offered fol
 their fulfilment are sadly at variencs one with the other and time has strength ened rather than weakened these con
 victions. Denver, Colorado, appears to
 be the headquarters of these institutions doing business in Arizona and 6 whole lot of good Tucson money has gone ID that direction. In no one instance have we heard an expression of satisfaction from those who forgot their home asso- c;atlon in favor of foreign institutions. But Arizonans are not alone the suffer CTS as may be seen by the following edi- torIal taken from the Aransas Pass, | (Texas) Herald, of May 2. We com mend it to the careful considerations of our readers.
 Almost every day the press dispatches report the failure of one or more build ing and loan associations. Thousands of poor people are losing the savings of years in those concerns. The local as- soci8tions are generally safe and useful institutions, confning their operations to localities under the observation of the shareholders. They are organized and conducted for the benefit of the share holders. The expense of management is nominal, and generally covered by an fna of S1 par charp
 The so-callei nationals" are counter feits of the locals, and are usually ''fskes" pure and simple. They are or genized for the benefit of the manage ment, and as tbeir operations spread over large areas, it is impossible for the stock holders to exercise any supervision over them. The shareholders are caught by attractive estimates that are impossl- ble of fulfiIlment. For instance, Den- yer national started out with the propos- ition that 1t would mature Its shares in six years though charging only three per cent per annum on loans. A man buy ing ten shares of the stock would pay his entrance fee of S1o, which went to the agent; and regular dues of S7 per month, S84 year, and S504 in six years, fer which the estimate prove conclusive ly that ID six years he would receive 5000. The agent proved it to him by may calculation of the marvellous sccu- mutation of interest compounded month ly. But neither the agent LOT the estimate made any account of the tax for expense, which WAS fixed at l 1-5 per cent of the par value of the stock, or 10 cents Der share per month. or SIP a year on the ten shares of stock. Un- der thls tax, which is common to nation als generally, there wae no probability ot maturing the stock in 8 generation, so that borrowers and non borrowers would be assessed for an infinite num- Der of years, and the borrowers, induced by the low interest to cucumber their homes with the cast iron m 0rtg8ges of the coHcerp, would be in the worst pos ition.
 .'The object of those concerns is to in- duce large numbers of people to pay tribute to the management. The na- tiopals are capitalized for large amounts, ranging from Sl0,000,000 to S5O,OOO,000. Suppose one capitalized at the larger figure should succeed in selling all the stock, the shareholders, paying 10 cents per share per month would pay the man. agement in the aggregate an annual in- come of Se00, 900 year. All this would be saved to the members If they were in local associations. With such returns in view it's no wonder that men of high standing lend their names to such cons cerns. h many cases they do not ap- preciate the full iniQuity of the 'fake;" in any case the temptation Is too great.
 "The shareholders enjoy 8 sense of security because the concern is under a bond of Sl00,000 to It's home state. Such a bond offers no security in transactions amounting to millions. In fact there is DO security to shareholders, and 1t can- not be conferred by legislation provid ing 8 bank system of examination and annual statements. The only security would be prohibitory legislation"
 Among the Denver outfits which can- vassed Tucson for subscribers was the Columbia Building & Loan AssociR- tion." One of our most level headed business men actuated more by spirit of inquiry than the allurements of big gains concluded to invest and so took 10 sbares of the "ColumbiR" at 90 cents per share. Seven monthly payments were made thereon, making 8 total ln- vestment of S35. At the end of seven months he decided to withdraw and in compliance with the laws of the Rssocia- ton gave due notice thereof and ceased payments.
 He WAS advised that inasmuch es money was scarce his application to withdraw would be held subject to the receipts of the institution, and ss they were somewhat slow it was four months before his withdrawal application was taken up for consideration and allowed. The following is copy of the statement rerdered:
 COLUMBIA BUILDING AND LOAN
 ASSOCIATION.
 Off. No. 5l204 DENVER, Col.