Omaha daily bee., 1911-11-06
THRIFTY HOME BUILDERS
Striking Features Of Association
Growth in Nebraska.
FROM INFANTS TO NnLL1ONAREs
ImpressIye showing in the Annual
Report OF state BANKING Board
FuII raid stock aud
Capital stock.

Royse TO the State Banking board, cover
ing the business Of building and loan as
| sociations OF Nebraska for the fiscal year
ending June 90 1911. just issued IN a
bound volume, contains much instructive
information on the development and the
activities OF these savings and home
promoting institutions. Most impressive
| is the showing Of growth since the first
report Of tho banking board issued nine
teen years ago. In 1892 there were
seventy -one associations In the state
with S.o2 shares outstanding and assets
aggregstins S2eo2,657. The report for 1911
shows sixty-nlne associations with eo2,l5s
shares and assets totsling SASS rs. eThis
enormous sum, five-sixths Of which was
gained IN the last ten years. represents
the savings and investments OF 6S,isS per-
sons, Of whom 1878 are borrowers and
i.454 minors. The recession in home
building operations throughout the state
last year is reflected in & reduction OF
507 IN the number sof loans made for
that purpose, compared with the preced-
ing fiscal year. and a consequent increase
Of s9l7,s53 in the item Of surplus cash.
First mortgage loans total s22l54,s5p;
stock loans, sSS6,2s0 and real estate,
326s9S1. The splendid growth shown By
this report Secretary Royse points out,
clearly sustains the wisdom OF Nebraska
financiers who had TO do with the laying
OF the foundations OF this branch Of
finance, now a potent influence for wealth
! creation IN this state" Truly these
pioneers bullded better than they knew,
for In drafting and securing the enact
ment OF the law OF 1881 they not only
safeguarded the infant associations Of
that time, but excluded from the state
the swindling national associations which
plucked millions OF dollars from the
conflding people OF adjoining states. The
magnificent fruits of that law. which
transformed infants into robust mill
lionaircs should suggest TO the bene-
ficlaries the proprlety OF rearing a suit
able memorial to the late Charles F.
Bentley OF Grand Island. the father of
that law, and the guide, philosopher
and friend OF cooperative thrift TO the
hour cf his death. Particularly appro-
pirate such a memorial would be II in
augurated by Omaha associations, whose
representatives sought TO have the bill
vetoed by Governor Boyd.
FuII-Paid stock.
One feature OF association business-tho
great increase in the issue OF full-paid
stock--comes in for criticism in the re-
port and is classcd by the department
as an element OF weakness. Especially
is this true" gays the report, lin the
too energetic effort on the part OF the
management Of many associations in
building up a heavy list of full-paid
stock. The intent of the law is TO en-
courage thrift by assisting the home
builder, otherwise known as the bor-
rowing stockholder, and by offering
J depository for the savings of the wage
Garner, who can spare but a. portion of
his income at regular intervals. 1t is
not the intention OF the law to create
institutions for large investors who are
looking for an income instead of q place
to accumulate savings" Ten years ago
the ratio Of full-paid to running stock
was about one-fourth; now it is nearly
one-half The reason for the increase
Is not far to seek. Most OF 1t came to
Omaha associations because savings
banks have ceased to be factors in the
financial life OF the city. The fact that
the associations weathered the storms
OF eighteen years ago and have since
in many ways proven their soundness
naturally attracts the investor as well
as the wage-earner and crowds the
treasures OF associations. The practice
complained OF. however, is working its
own cure. No association seeks more
money than 1t can safely employ. When
ever a surplus becomes large enough to
, effect the dividend rate, prudent man
ayers can not only restrict or refuse de-
posits of large sums, but also may re.
deem full-paid and running stock at will.
Hence the remedy rests with the man
agement. The Nebraska department is
, not alone in pointing to fuil-paid stock
; as possible danger. Other state de-
partments have commented on the prac-
, tice, the most recent being the banking
commissioner of Pennsylvania, where
only per cent of outstanding stock is
full-paid. The idea of the Pennsylvania
commissioner is that associations should
be restricted closely TO the periodical
payment system Of hygone days and the
issue OF full-paid stock restricted.
Among association men these restrictive
notions arc viewed with suspicion,
| coupled with the intirnauon that they
J are traceable TO competitors in the money
business.
Some months ago Secretary Royse sub
I mitted - the attorney general this ques-
. ton: should ito articles OF incorpors-
4 tion of loan aud savings association
. be approved without having the amount
of the authorized capital stock stated
q In the articles2" The affirmative an
. swer OF the attorney general is printed
9 in the report. The. attorney general
a briefly reviews the laws governing as
n sociations and the Interpretation OF
4 these Laws by the courts. particularly
r emphasizing the remarks OF Judge Bsrne4
i. In deciding the case OF the Nebraska
- Central Building and Loan association
e against the Board OF Equalization, u
. Neb., fT6. as follows: 1T appears thai
a they may commence business upon the
approval OF their articles Of incorpora.
ton, constitution and by laws, without
any capital. This privilege Is not &C,
corded 10 any other class Of corpora.
s tlons. They are not required 10 hay,
any fixed capital stock. Their stock
=, holders may withdraw from the sssoc1a
I, ton after ninety days on thirty days
= notice. In fact such associations hav,
!, no capital stock in the proper sense D
N the term" The attorney general con
J. cludes his answer with these words: "B,
- reason OF the plain words OF Judgt
Barnes IN constituting the act relating {,
D. building and loan associations. l an
constrained 90 say that a statement o
authorised capital stock Is not neeessar,