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the secretary's desk. A clerk in very spruce clothes, behind him a shop-girl, pallid with toil, then an elderly man bronzed by a life out of doors. Behind these, two or three children with their hands filled with their little hoard of currency, the result of their month's small savings. Then more girls and women, evidently people who live laborious days. Others follow who never did a thing in their lives. Then a telegraph boy, alert and bright-eyed; then more men, retired merchants and small traders, storekeepers, watchmen, people of means and day laborers. Rich and poor, high and low, the hard worker and the idler living on the profits of his shares. Each and all come to pay their one dollar on their several shares. At the desk an old gentleman in glasses examines the money deposited, signs the little pass-books, gives one to the treasurer and the other to the assistant-accountEach book is examined twice and each dollar counted twice, and then the depositor moves on to make room for the next. The pile of bills on the treasurer's table grows quickly. The stream of capital flows in by ones, twos, fives and tens, and in a short time the account runs up to a thousand dollars.
women, and among the men are representatives from every station in life. At half-past eight the president of the association calls the meeting to order. The hall is now well filled with a quiet and rather sober crowd. These are the borrowers. Some are members of the association, and others are entire strangers, attracted hither by the winning advertisement of money to loan. All the money collected this evening, together with all received from every source during the last month, is now to be offered freely to the highest bidder, be it man or woman.
The president then calls upon the secretary to read the minutes of the last meeting and the directors' statement of the past month's business. The minutes are merely formal, and the directors' report shows what was done with the association's funds. names of the successful borrowers at the last meeting are given, with a full statement of the amounts loaned, the premiums they paid, the security they offered, and its location, character and value. From this statement it appears that all the money received up to the time of the last meeting, excepting $2,000, was loaned out on ample security. This $2,000 added to the monthly dues and interest paid in and the loans returned, etc., makes a total of $13,000, all of which is now for sale without reserve.
There is a murmur of pleasure at this good financial showing, and the president announces that the sale will now begin. As there are some strangers present, the secre
The majority of the depositors, or lenders, as they are more properly called, having paid their monthly dues, retire to their homes, content to leave the directors to manage the business meeting of the association that is to follow later in the evening. They repose entire confidence in the direc-tary rises and announces the terms of the sale. tion, and, unless they wish to take out or borrow some of the money, return home without delay. The association is, to them, a superior kind of savings bank, and they trust it far more implicitly than do the depositors in the average savings institution in New York. More than this, they know that no burglar can rob this bank, no thieving president enrich himself with pious irregularities; they are sure no foolish bills of extravagance for gilded ceilings, silverplated counters and damask hangings, will be incurred to gratify the vanity of officers who never pay a cent of the cost. There is no brown-stone palace, no steel vault, no outrageous rent-only this bare little hall at two dollars a night, a trifling account at a city bank, and one absurd little salary to be paid; but the best of security for every dollar in good land and well-insured houses.
More people come in, and some take seats at once without joining the line of the depositors. There is quite a sprinkling of
Any member can borrow on his share, even if it is only one month old. Those who cannot give real estate as security, and who have only just joined the association, or who wish to join, must bring a bond signed by some responsible person, that he or she will pay the dues for at least three years. This bond is only for the dues, and not for the loan. Any member who has been in the association more than six months can borrow up to the withdrawing value of his share, without real estate security. All members who can give real estate security can borrow up to $200 (the ultimate value) on every share they own, but no one can bid for more than ten shares at once. If he wishes more than $2,000 he must bid again. The premiums offered for loans will be deducted from the loan, and in case the security offered is not acceptable the loan will be refused, and the borrower will be obliged to pay the month's interest on the money at six per cent. This is to prevent
Those who are not members gather round the treasurer's desk to buy the shares that entitle them to the loans, and to give the locality where the houses and land they offer for security may be found. In a short time the whole affair is arranged and the meeting adjourns. The money received from the lenders is given to the treasurer, and he takes it home. To-morrow it will be placed with the rest of the capital in some bank, there to remain until drawn out by checks to supply the borrowers whose bids are finally accepted by the directors. In a few days one or more of the directors will be detailed to examine the securities offered, If they prove good, the directors in regular meeting assembled at some private house, or elsewhere, will make the loans. The solicitor will then be directed to examine the titles. The securities not deemed good will be rejected and the loans will be refused. In that case the borrower must offer other security or pay one month's interest on his bid, and then he has leave to withdraw. A month hence these things will be fully reported, and the money left over on refused loans will be offered again in open auction. To such simplicity is this system of cooperative banking reduced. In this easy and inexpensive manner is this business conducted. Lenders and depositors on one side, borrowers for every known purpose on the other, the poor lending to the rich, the rich both borrowing and lending. They call such an association as this a building and loaning association. In reality, it is, as we have seen, only a saving and loaning bank. The association itself does not build, nor does it ask what its members propose to do with the money they take. It may be for a house or to buy land. It may be capital to start some manufacture, to open a store, buy a piano or sewing-machine, furniture, or wedding outfit, or to obtain an education. If the security is good, that is all the association cares to know. Such is the personal aspect of this matter. These are the people who made and use these associations. The homes that line Philadelphia's streets represent the tangible result, the outcome of this system of finance.
Suppose a number of people in a certain place wish to start such an association. Some desire to furnish a safe and profitable means of saving the earnings of those about them. Others wish to see the town built up, taxable property increase, and real estate raised in value, or they wish to buy or build a home. There is no capital in the town
except in the hands of one or two hardfisted fellows, to deal with whom is always a trial and a grind. There is a good deal of money in trifling sums scattered through the place. If collected in one fund it might be of great benefit in many ways. These people meet at some private house and become the promoters of the enterprise. The affair is duly talked over and the result is that some twenty or more subscribe, say, twenty-five dollars each, or one advances the money to the new association and a fund is thus created. This little capital is to aid in procuring a charter, to get the necessary account-books and to advertise the new association. charter is procured and a name selected and the first meeting is announced. Thus far the association has no existence and no capital. The fund subscribed was only the "starting bar" which sets the train in motion. The public attends the meeting partly out of curiosity, partly to see who is likely to be placed at the head of the new bank, and partly by an unexpressed but very eager desire to get the use of the new association's money. The meeting is called to order and the charter of the new society is read. The number of shares is fixed at 2,500, and of these a number are offered at one dollar each. Any man or woman can buy one or as many as they like up to fifty. If the people have faith in the promoters, they come forward and buy such as they desire. Perhaps four hundred shares are taken by about one hundred different people.
The next step is to organize, and to elect the officers and directors. Each shareholder has one ballot (without regard to the number of shares he holds) and the business is soon finished. The laws of Pennsylvania permit each share to have a vote. The best associations disregard this and give each shareholder one vote only. The by-laws are prepared and accepted, and the association begins its existence. In many cases the original promoters are elected to one or more of the offices. If time admits, the officers are installed that evening, and the books of the association are opened. The new directors then hold their first meeting. The pass-books and certificates of stock are issued, the treasurer presents his bonds, and the salary of the secretary is fixed at about $200 a year.
Meanwhile, others become interested and call on the secretary for shares. Any one who can pay a dollar a month may purchase a share. Women, whether married or single, or the former independently of their husbands, may take as many shares as they
feel they are able to carry.
Parents and guardians may invest for their charges. It is a savings bank, free to all. A month passes and the next meeting is held at some small hall. The cheaper the rent of the room, provided the place is decent and respectable, the better, for it gives the association a reputation for economy that gratifies the present members and wins new ones. The second installment is now paid in, and more shares are sold at two dollars each, and the association declares itself ready to loan money.
Capital has appeared in the town. new and most liberal-minded capitalist stands ready to loan to such as can meet his easy demands. The meeting is called to order, and the secretary announces that the association sold at its first meeting perhaps four hundred shares, that some three hundred more were taken during the month, and that one hundred more have been taken this evening. He adds that two installments have been paid on each, and that about $1,400 is now for sale. If the premiums offered are high, a few hundred dollars more will be added to this amount.
In this simple manner is the business of the association started. There is no confusion, no extravagant bill of expenses, no secret meeting of directors, eager and thoughtful for their own interests only. All is plain, fair, and above board. Any member may examine the books of the bank on demand, and at the end of each year the stockholders appoint from among themselves three auditors, whose duty it is to turn the affairs of the association utterly inside out, and to exhibit its every transaction in the minutest detail in a printed report, a copy of which must be given to every shareholder. Should this report affirm neglect or irregular doings of any kind on the part of the officers, should it point out foolish loans and illconsidered securities, or anything wrong, the entire direction, president and all, may be dismissed and better men put in their places. No one shareholder can gain a ruling interest. Should the poorer shareholders, the holders of single shares, find fault, or be dissatisfied, they have ample redress, for they are almost always in the majority.
The stockholders in these building and loan associations are commonly divided into two classes, the borrowing and the nonborrowing. This distinction is shadowy, for any shareholder may become a borrower at any time. First may be considered the simple depositor or stockholder who has no immediate intention of becoming a borrower.
He buys one share, for which he pays one dollar. There is no ceremony, no entrance fee, and no drawback of any kind-he simply pays, and takes the pass-book and certificate of stock. Once a month the stated pay-day comes round. He pays his installment, and gets a receipt in his pass-book from the secretary. If he owns two shares, he pays two dollars; if five, five dollars, and so on. If he lives at a distance, he may send a check or money-order. He may anticipate his payments to any extent, and, if it is for more than six months, interest will be paid on the advance. Presently he misses the payday, and then comes a small fine for the neglect. If he neglects another payment, the fine is greatly increased. This spurs him up to greater economy, and he begins to be careful and thoughtful of his money affairs. In this way the association becomes an instructor, pointing the way along the safe and prosy old road to fortune.
The year passes, and then he receives the association's annual report. Therein he finds that one share is declared to have a value
of $17.97. He paid $12 in, and his share of the profits amounted to $5.97. His share is not actually worth $17.97, for that sum cannot be realized on it. If he wants his money, he may have it, and 6 per cent. interest for the average time, not $17.97, but $12, with interest. Let the money rest, and in time that $17.97 will be realized, and a great deal more. This fact becomes an incentive for renewed savings, and the second year begins hopefully.
Another twelve-month passes. The installments, not without a fine or two, are paid, and then comes another annual report. This is even more interesting than the first. The long and elaborate array of figures is truly impressive; but the most enticing statements are the valuations of the various series of shares. His share is in series number 5, now two years old, and it is declared to be worth $38.31. Its last valuation was $17.97; he paid during the year $12 more, and the association earned for him $8.34. In other words, he paid in $24 in twenty-four months, and he has made $14.31 by the investment. Turning to another part of the report, he finds that, if he wishes to withdraw, the association is willing to buy his share for the money paid in, and a premium of $3, or $27 in all; $3 from $14.31 leaves $11.31. That is too large a profit for the association, and he decides to let his money rest, and to continue paying his dollar a month.
Another year passes, and he finds he has
paid $36 in all, but the new report declares | ciation. However, he has the consolation of knowing that his two remaining shares will reap a part of this benefit.
his share now worth $59.78. This is cheerful. Now is he beginning to be a moneyed man. He is growing rich almost without knowing it. Why did he not take five shares instead of one? It would have involved a more stringent economy, and perhaps more thought and labor; but he might have been credited on the association's books with almost $300. Indeed, a princely sum for such an one. He goes steadily on, paying his dollar a month year by year, and the one dollar grows to $108. Then comes the best report of all. With a great flourish, the directors make the happy announcement that the series of shares he is in, and known as the fifth series, has matured, and reached its ultimate legal limit of $200. Now there are no drawbacks. For his investment of patience, and $108 in nine years, is the handsome profit of $92, and the sum of $200 in crisp bank-notes. He takes his money, surrenders his one share, and then amuses himself in figuring up the rate of interest he has received.
This is the experience of a plodding shareholder, content to pay his dollar a month for one hundred and eight months. Another has quite a different experience. He begins by taking fifteen shares, and at the end of the first year he finds he has undertaken too much. He withdraws five shares, and receives the $60 paid, and interest on the money at 6 per cent. for the average time. He has now only $10 to pay each month, and at that rate continues another year. The burden is still troublesome, and he decides to withdraw five more shares. The report offers a premium of $3 per share. He therefore gets the $120 paid on five shares in two years, and $15 besides. Misfortunes crowd upon him, and in six months more he decides to take out one share. He then receives $33, $30 for the thirty months' installments paid in, and the premium of $3, declared six months before at the last annual meeting. Six months later, at the end of the third year, he decides to withdraw two more shares. A single share is now declared to be worth say $55, and the association will buy all shares offered at a premium of $7. It seems a pity to allow the bank to make so much out of him; but he must have his money, and his two shares bring him $43 each, $36 paid in, and the premium of $7. The difference between the face value of $55 and the real value of $43 is, of course, lost, and becomes the property of the asso
He continues to pay the dues on his two shares for another year, and then he transfers them, to close an old and troublesome debt. Each share has a face value of $82, and a selling value of $60. His creditor is very glad to take them at this valuation, and they are transferred to him as so much money. The original investor made a number of profits on his withdrawals, and found a safe and ready means of saving his money in his more prosperous days. The new owner may continue the payments till the shares mature, or he may withdraw or sell them. They are as good as money up to their selling value, and every month they increase in value.
Thus is the depositor in these savings associations hedged about; thus is he taught frugality, steadiness, and the elements of finance. The plain and only safe road to fortune is pointed out to him, and every step along the sometimes weary way is made the easier. The monthly payments are easy, the fines act as a good spur to keep the depositors up to the work. notice prevents hasty and ill-advised withdrawals, and even then each must take his turn, and at no time can more than half of the available money be taken out. These formalities induce a safe delay, and place the associations above the reach of panics. Commercially considered, they are as safe as any institution of the kind can be, and in every respect they are safer than the ordinary savings bank. The total collapse, the utter vanishing away of all the deposits, sometimes seen in a savings bank, cannot take place here. The older an association grows, the richer it becomes. Each month its capital is renewed, and every year an entirely new set of shareholders bring in their fresh capital. Certainly the depositors, be it struggling shop-girl, laborious mechanic, or helpless widow, have everything to encourage, and little to make them afraid.
The borrowers, those who use the funds of the association-those to whom it is an efficient aid in buying or building a homeare also members and shareholders. They are divided into two classes: borrowers on shares and borrowers on real estate. The first give their shares as security, the others give their shares and real estate also.
Here is a shop-girl who is a member of a well-established association. She has worked at dress-making for three years, and owned