The Montgomery advertiser., 1901-08-20

there are several in this State that have had no lawsuits and the people that have borrowed from them. the | people that have built homes through the Association have no complaints. | Now that was a specimen of the argu- ments--selecting three institutions in this State. and because those institu- tions have not been successful, to make that a reason for prohibiting other in st!tutions properly managed from be- | ing carried on. The gentleman could I well select three insurance companies or three banking institutions, includ- ing the State bank. and say that there | fore because they were not successful, that such institutions should not be | permitted. MT. Boone-Do you state to this Con vention that under the laws of Ohio and under the laws of Pennsylvania where it is said such companies have done good, have the privilege as they have in Alabama? Mir. Walker-As 1 am not acquainted | with the laws of Pennsylvania and thio. compared with those of the State of Alabama. l vii not undertake to give the explanation.
 MT. Boone-I say that they sIe not.
 
 miliar with the subject when cham pioning one side.
 Mr. Walker-I will leave that % the Convention and I will not undertake | to answer the last thrust of the gentle man. l disclaim having the fund of in l formation that the gentleman from Mo- bile has at his command.
 Mir. Proctor-I would like to ask a | question. Suppose an aggregation of I..As< ffA1 ~~,~k e. e | lending the farmers money to make crops at 14 or l5 per cent interest. wha- do yot think the people would say to a proposition like that?
 MT. Walker-I think if the farmers themselves were gettinS the benefit, | and 1t was a mutual concern l do no. think it would be anybody else's busi- | ness. That is the situation. Here are these concerns getting from themselves out of the borrowers these rates of in- terest. 1t is impossible for that to be so in properly managed Building and l Loan Association. Why? Because the | borrowers as well as everybody else has l got as much interest in the amount of money received whether interest or anything else, as anybody else in the Association-it is mutual concern.
 Mr. Pillans7ds it not a fact that in | these mutual concerns known as Build ing and Loan Associations. the borrow CT. as these gentlemen style him, is a person not expected to pay back the principal. but 1t is paid by the accu- mulated profits and interest.
 l MT. Walker-Of course. The gentle men claim that they ought to pay legal | rate of interest. That Is an impossi- bility where the scheme is for the amount to be paid back monthly or an nual installments which, in course of l time, by re-investment will cancel the debt.
 MT. Macdonald-I have had some lit- tie experience in this matter and 1t seems to me that the opponents of the | minority report have overlooked or for gotten the decisions of the Supreme Court in reference to these Associa- tions.. and the contract made bv the parties that deal with them. They are stockholders or mortgagors or debtors. as they are called, as the occasion may arise. The difficulty about the propo- sition is this. that our Supreme Court has repeatedly, within the last year or two. decided substantially that these corporations are far away and beyond the law in any respect. and any one familiar with the decisions in that re- gard win bear me out in that state ment. The Supreme Court has decided and said in substance that these are bad contracts but they are based upon | legislative enactment. and they will not relieve the parties that make them. l They have decided that when a man goes to one of these Associations and asks for a statement of his account and gets 1t. and he denies the correct ness of that account and files his bill in court of equity. for the redeeming Of his mortgage alleging that the full debt has been paid. that he cannot get out because he has made such a con- tract as this and that character of contract is based upon the statute Now that Is the character of privilege granted by the legislature of Alabama to these institutions, that when a man borrows money from them be- comes indebted to them, he absolutely belongs to them and cannot even re- deem his own mortgage except at the kind permission of this company. It is said by the gentleman opposing tha minority report that these institutions were created for the benevolent pur- pose of allowing number of people to get together and mutually aid ir building homes-a very benign and he. nevolent purpose. but one entirely de- parted from by these institutions. Ev- cry one of them of any importance whatever in this State, issue what
  words they borrow money from large investors at per cent or more and the purpose in lending the money Is because they can get larger rate oi interest and better security than they can get anywhere else, and they pre- fer preferred stock, and this rate oi interest on their money is taken out of the profits of the business, whereas their contract with those who borrowed money to build homes is that their debts are paid out of those profits, and that thereby by this action the profits which should go to the payment of the stock and ultimately to the payment of the debt are diverted from their or iginal purpose and go to the men who loan the money.
 When the man who borrowed money goes to get a statement, they will tel him they have paid out in interest i'm mense sums to those who loaned then money.
 MT. Boone--Under the operation oi these associations, say a man made 8 loan on his house of $1.000, and he took stock after he had paid off the amount loaned, does he not have to keep or paying?
 MT. acdonald-Absolutely, there is an indefinite time for their collection oi seventy-two months, or whatever they chose to put 1t in their alluring pros. pectus. or promie to the borrower which they say is an estimate. As was said by the learned Chancellor of this district in a case before him, that ii they were correct in the proposition. the borrower was entirely at their mercy that the payments would go on indefi.