The state herald., 1898-01-21
PAYING INVESTMENTS
BUILDING AND LOAN AND saw
iN0S ASSOCIATIONS LEAD:
A Less Percentage of Failures Than in
Banks, Railroads or Insurance-New
Laws Enacted In Their Intcrest-The
Courts Regard Them With Increased
Favor.

banks, Railroads or Insuranco-NeW
Laws Enacted In Their Intcrest-The
Courts Regard Them with Increased
Favor.
For several years the feeling has
been spreading in the West, as well rs
In the East, that speculative invest
ments are seldom desirable for wage
earners or people of moderate means,
and men and wcmen of this class have
been turning their attention to safe,
regular and Legitimate business invest
ments. In view of this fact it speaks
well for building and loan associations
that during this period they have
steadily increased their membership
and capital, while the business of other
kinds of financial corporations has
greatly decreased.
According to recent official reports,
the national banks have an aggregate
paid-up capital of S650,000,000, owned
by 2SS,000 stockholders, while the
building and loan associations have u
pnid-up capital of SG07, 100000, owned
by 2,5OO,000 stockholders. The number
of stockholders in the latter exceeds
those In the former nearly ten to one.
lAc COuIptTOllcT VI tHc CuTEtHCy
shows that during the past four years
the capital stock of national banks has
decreased more than S40.000,00O. while
their assets decreased $2i6, 400, ,5Si, and
the records in most lines of business
show greater decrease than in the
case of national banks.
How Is it with building and loan as
sociations? There are fourteen states
that issue official reports, representing
more then I6 per cent. of the active as
soclations of the country. In his bulle
lin, issued in May. 1897, the commits
sloner of labor says:
Comparing the figures for fourteen
states for the period covered by the
ninth annual report of the commission
cr of labor, the fiscal year of the asso.
ciations ending nearest to January /,
1893, with the figures for those four
teen states as shown by recent state re-
ports for 1906, n growth is shown In
every item. The number of
associations reporting. which repre-
scnts practically all active associations
year old or over. had increased from
4.443 to 4.531. or . per cent. The shares
outstanding had Increased from 0.5OO,-
I55 to 9,3S5, 300, or > 1-10 per cent; and
the installment dues paid in. plus paid
up and prepaid stock, and profits had
Increased from S310,i71 $50 to S449.-
G43,0iS, or 81 4-10 per cent"
Notwithstanding this great Increase
In assets, these associations during the
past year have paid to withdrawing
members and on stock that has ma
turcd, more than Sl34, 100000.
Since 1893 the records show that 1l0
national banks failed. involving SGJ,-
53i.3S1 In assets and 500, TI5.020 In
capital. During the same time 13l
building and loan associations have
failed. involving assets of S14.2it goo
or Sol ,323,3S1 less than was involved
In the 1I9 national bank failures. An
other feature shows n still greater dis
crepancy. The stockholders of the
failed national banks. out of SSi, $40. :
900 of paid In capital and assessments.
have only received In cash the sum of
Sl.l1I,3Sl, which indicates that their
holdings have little or TO value In the
event of failure. ON the other hand,
the assets of the associations. which
are almost exclusively Invested In first
mortgages upon real estate. are tangi-
bile and usually repay 10 shareholders.
IN any event. large per cent. Of their
Investment
Since 1899 there have been 5o3 fail
ures OF this class of banking insiitu-
tions, involving assets of SSl. .3n3, 1i5,
They have paid their deposiiors less
than - per cent, while In nearly every
instance the loss OF the stock holders
has been total.
The records of the national board OF
flrc underwriters show that S27 Joint
stock fire companies have failed within
the past few years, involving n paid-up
capital of S11I.3l2,G33 and aggregate
assets OF S10l .STs.i52 and the most OF
these companies failed to pay their
creditors In full. while their stockhold.
rrs met with n total loss Compnrej
with these the losses OF building and
loan associations are insignificant.
The records show that during the
past four years III railroads and 49,.
So5 miles OF track have failed and tina,
the stock and bond liabilities Of these
roads amount TO s2.So0. 100000. or In
other words, that these failures involve
twenty-five per cent. OF the aggregate
capital stock of all the railroads In the
country.
The commercial failures during the
past four years have been enormous,
Dun's review shows that during ISaC
the ratio Of dcfaullcd liabilities Ia
clearing house exchanges was si.37 per
$1,000 and ihat the ratio In 1879 was
$3.50 per $1,000. with losses almost ns
, great for the Two Intervening years,
| There are no accurate figures available
In regard 10 the failures Of land and In.
vcsimcnt companies nnd similar msll.
tutlons. but the stockholders loss IN
connection with such institutions Il
probably more than scyeniy-nyc pef
cent OF the total Invested.
These statistics show that the fail
nrcs OF national banks during the pnst
-four years ARE about i've times greater
than those Of building aud loan nsso,
cit,lons. and that The percentage In 9th
| ~ nncs IL very much greater.
Ia view OF these facts II Is not sincu
lar that the business Of building aud
loan associations has Increased while
That OF other financial Institutions hns
decreased. when times bcgln to re-.
vlyc with the beginning OF n more ne.
tive business crn. we may naturally cx.
pctl 10 spe the building aud loan m,sI,
ness so forward by lenps aud bounds.
while stock IN all the strong nnd con.
setyntivc associations win b. eagerly
sought for aH not only one uf the most
profitable, but one Of the safest possl.
blc Investments.
4 careful review of recent lrgIslniIy.
cnnctmcnls aud decisions In state nnd
federal courts shows that building nnI
loan associations nrc constantly coming
Into high favor. Laws arc mnde for
III. express purpose OF promoting nnd