The Washington herald., 1908-07-12

/ At recent meeting OF building society
directors in Philadelphia, nearly all OF
them secretaries the business depression
| OF the last six months became topic for
4 discussion. Some Of the secretaries came
from mill districts that were great suf-
ferers from the stoppage Of work. but all
| agreed that their societies had not lost
anything and that there was little indlca-
/ ton OF a financial panic in the business
| Of these savings Institutions
The societies. as such. do not suffer at
/ all, as has been proved in other periods
of hard times. II shareholders are obliged
/ to withdraw. a society may show smaller
assets but It's liabilities viii be lessened
/ 10 greater degree, so that its gains viii
be increased This is due 90 the fact that
a Withdrawing shareholder does not get
/ the full or book value" Of his stock.
/ But the shareholders know this very
well, and therefore they seek to avoid
withdrawal before maturity Sometimes
they take out stock loans TO tide them
over a period Of depression. repaying the
| loan when work has been resumed
Learned authorities declare that such
shares must be cancelled when the loan
has been repaid, but even In such case
only part OF ones holdings must be sac
ridced under this ruling
Borrowing on Collateral.
If. for example, a member holds I'VE
shares, Of an ultimate par value OF 500,
and a present book value Of $40 each. he
can borrow on one OF the shares 500.
using the other four shares as collateral
/ security. Then. If he should repay his
/ loan the four shares viii Doe returned 10
him. he Will sacrifice only the share upon
which the loan was made
In practice some societies permit stock
/ loans 20 De repaid and restore the b0r-
rowed shares 90 the free list. uIJ there
. is no authority or law Tor such O. proceed
/ ure. and it is not necessary. even for the
| accommodation Of those who want small
temporary loans.
When hard times put a check upon saw
I ings the building society shareholder
usually tries by making other sacrifices.
E 10 keep up hts payment or dues. Failing
F IN that he either wi-hdraVs his stock. a
process which not only relieves him ~
i his monthly Obligation. bat gives him the
T immediate use of his savings, OF DE boz
rows 0u his stock iu the manner outlined
above and uses the borrowed money 10
maintain his payments until Le is again
able 90 save something from his weekly
] earnings.
The result IS that a period o. business
depression, unless lt lasts "a long time.
makes scarcely amy impression upon the
/ business of Philadelphia building So
ciety and rather increases It's gains
borrower Chief Sufferer.
/
/ the borrower who IS engaged in buying
/ his home. he Is obliged 90 keep up his
monthly payments or fan in arrears. and
/ II his Indebtedness on this account be-
comes large the sociaty's mortgage may
I be foreclosed. He cannot. like the holder
/ Of free shares. withdraw and thus rid
himself of the monthly charge. nor can
he borrow money on his shares. for ne
has already exhausted their borrowing
/ power.
drift behind. FOR IN that case fines for
nonpayment OF dues and interest add
largely 10 his obligations.
When q borrower has been thrown out
of work by a general depression I'm trade
and f0resees that he viii be idle for sew
eral months 70 come he should az once
communicate with the directors OF his So
ciety and state the situation frankly 10
them. They may be able TO help him in
one Of several ways
Sometimes we have known societies In
the mill districts 10 reduce the fines or
suspend them altogether during periods
Of enforced idleuess Sometimes q b0r-
rowing member can be given relief by be-
ing accorded q new loan of q reduced
amount, using his savings 10 pay of
part of the original debt
Monthly Charge Reduced.
In this way the monthly charge may b5
considerably reduced. although the time
required TO pay the debt viii De pro
longed- This remedy is not TO be recon-
mended except IN case of necessity. for it
involves losses TO the borrower, but these
losses will be iuconsiderable compared
with the sacrifice Of his home The main
thing is 10 ACT promptly. before a large
floating debt. with accumulated fines. has
been piled up.
This can be done without much dfH-
Guilty where the cause OF loss OF ones
employment is a general suspension Of
business. for IL is known when the mill
or workshop shuts down that il viii not
be reopened for several months. and also
that there VIII be little opportunity 10 get
II
number Of unemployed seeking work
IN such "a case. before any default has
occurred. the borrower should consult
with the directors Of his society and
frankly state his case. The directors,
apart from their natural sympathy with
one in distress, are impelled by their duty
TO the society 70 help the borrower out Of
his difficulties. If they can find a way 20
do so
The society does not want his house; Il
is tolerably sure 20 lose money n q takes
it. and therefore il Is % the interest OF
the society 20 nurse along the borrower
and help him 10 keep Up his payments. 50
that foreclosure proceedings viii be un-
necessary.
How Loans Are Repaid.
A correspondent writes thet six years
ago he borrowed 5000 from a building
society and desires % know how much
he viii have 20 pay TO discharge the loan
and how the calculation Is to be made.
Without knowing the withdrawal value
Of his stock It is impossible 20 say exactly
what amount Of money VIII De required.
but the process Of ascertaining the
amount Is quite simple.
He owes the society 5000. He has. to
Offset this. ten shares Of stock six years
old upon which he has paid $40. They
have a withdrawal value OK more than
this (the exact amount can be ascertain
ed from the secretary of the society but
probably about $500.
The amount 10 be paid VIII therefore
be approximately I.1S0 This amount
having been paid. the mortgage viii be
Cancelled and the borrower will transfer
his shares TO the society and no longer
have any interest or membership therein,
unless he should hold other shares.