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of each six months he is credited with a dividend of 21 per cent on all sums which have been on deposit for six months preceding, or 14 per cent on all sums which have been on deposit for three months preceding.

The results urder the above conditions are as follows:

BUILDING AND LOAN ASSOCIATIOX-LOWEST PREMIUM RATE.

Cost of a loan of $1,000 from a building and loan association in Massachusetts with dues at $5 and interest at $5 per month-no premium being charged-running to the maturity of the shares, 133 months, $1,330.

In this case the borrower pays in cashDoes at $5 per inonth for 133 months .

$665.00 Interest at $5 per month for 133 months..

665.00 Premium Total cash paid....

1, 330.00

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SAVINGS BANK.

A loan of $1,000 is secured from a savings bank at the interest rate of 5 per cent per annum payable semi-annually, principal payable at the end of 133 months. The borrower deposits in the savings bank each month a sum equal to the above amounts paid into the building and loan association. From this sum he will require $25 each six months to meet the semi-annual interest payments.

His account at the end of 133 months is then as follows: Deposits, $10 per month for 133 months.....

$1, 339.00 Less withdrawals to pay interest on loan, $25 each six months for 133 months ...

554. 17

Deposits remaining in bank at end of 133 months
Adel dividends credited semi-annually...

775.83
262.28

Balance in bank at end of 133 months.......

1, 038.11 But this balance in bank is $28.11 more than is required to pay off the principal of the loan. In this case then the same payments which are required to pay for

a loan of $1,000 from the building and loan association at its lowest premium rate would have paid for the loan from the savings bank and left a cash balance of $38.11.

BUILDING AND LOAN ASSOCIATION-HIGHEST PREMIUM RATE.

Cost of a loan of $1,000 from a building and loan association in Massachusetts with dues at $5, interest at $5, and premium at $3 per month, running to the maturity of the shares, 133 months, $1,729.

In this case the borrower pays in cashDnes at $5 per month for 133 months

$665.00 Interest at $5 per month for 133 months..

665.00 Premium at $3 per month for 133 months.

399.00

Total cash paid .....

1.-729

SAVINGS BANK. A loan of $1.000 is secured from a savings bank at the interest rate of 5 per cent per annum payable semi-annually, principal payable at the end of 133 months. The borrower deposits in the savings bank each month a sum equal to the above amounts paid into the building and loan association. From this sum he will require $25 each six months to meet the semi-annual interest payments.

His account at the end of 133 months is then as follors: Deposits, $13 per month for 133 months......

$1,729.00 Less withdrawals to pay interest on loan, $25 each six months for 133 months .....

551. 17 Deposits remaining in bank at end of 133 months...

1, 174.83 Add dividends crediterl scmi-annually........

391. 20 Balance ia bank at end of 133 months .......

1, 566.03 But this balance in bank is $566.03 more than is required to pay off the principal of the loan.

In this case then the same payments which were required to pay for a loan of $1,000 from the building and loan association at its highest premium rate would have paid for the loan from the savings bank and left a cash balance of $566.03.

BUILDING AND LOAN ASSOCIATION--AVERAGE PREMIUM RATE.

Cost of a loan of $1,000 from a building and loan association in Massachusetts with dues at $5, interest at $5, and premium at $0.78 per month, running to the maturity of the shares, 133 months, $1,433.74.

In this case the borrower pays in cashDues at $5 per month for 153 months

$665.00 Interest at $5 per month for 133 months ...

665.00 Premium at $0.78 per month for 133 months

103.74

Total casin paid....

1,433.74

SAVINGS BANK.

A loan of $1,000 is secured from a savings bank at the interest rate of 5 per cent per annum, payable semi-annually, principal payable at the end of 133 months. The borrower deposits in the savings bank each month a sum equal to the above amounts paid into the building and loan association. From this sum he will require $25 each six months to meet the semi-annual interest payments.

His account at the end of 133 months is then as follows: Deposits, $10.78 per month for 133 months...

$1, 433.74 Less withdrawals to pay interest on loan, $25 each six months for 133 months .....

551. 17 Deposits remaining in bank at end of 133 months..

879.57 Ada dividends credited semi-annually.

295. 78 Balance in bank at end of 133 months.....

1, 175.35 But this balance in bank is $175.35 more than is required to pay off

In this case, then, the same payments which were required to pay for a loan of $1,000 from the building and loan association at its average premium rate would have paid for the loan from the savings bank and left a cash balance of $175.35.

Table P.--Loans to other than shareholders, pp. 380, 381.-By this table it is seen that only 76 out of the 2,245 associations reporting have loans to other than shareholders, and that they have 2,056 such loans existing, the aggregate value of which is $2,328,621, being an average of $1,133 for each loan. These figures prove conclusively that the associations adhere very closely to the rule of making their loans to shareholders only.

Table Q.--Associations taking money on deposit, pp. 382, 383.—Building and loan associations are not banks of deposit, yet we find 641 taking money on deposit, and the table shows the varying rates of interest paid on such deposits, the prevailing rate being 6 per cent.

THE DAYTON PLAN. Among the managers of building and loan associations the so-called "Dayton plan" is fairly well known. Very many consider it a model plan, and have suggested that it be incorporated in this report, that all interested in the conduct of building and loan associations may be able

to use it should they desire. Mr. A. A. Winters, general manager of | the Mutual Home and Savings Association of Dayton, Ohio, has very kindly furnished the Department with the following statement:

The so-called Dayton plan of conducting building associations is not anybody's invention. It is a growth; the growth of twenty years. Hence, it has not been the same in any two successive years. I will therefore confine myself to the plan as it is now in operation, leaving entirely out of account what it has been. As the developments and changes which have made up the Dayton plan have mostly originated in the Mutual Home and Savings Association of Dayton, Ohio, I will also confine myself to the plan as practised by that association.

In the first place it must be noted that the plan is applicable to permanent associations only, and can not be applied to either terminating or serial associations.

The plan differs from other plans in four main particulars, besides some minor ones.

First. New members may join at any time without paying back dues. Second. Paid-up stock is issued.

Third. Premium is entirely abolished, each member being entitled to borrow money in the order of his application at such rate of interest as the board of directors may from time to time fix.

Fourth. Earnings are not only ascertained and divided semi-annu. ally, but when credited are subject to withdrawal the same as money payments.

I will take them in their order. As a preliminary observation, however, I might say that the main object of all these changes has been to simplify methods and to enable the association to more easily adjust itself to the situation and needs of the various people with whom it deals. All the older plans are more or less iron-clad. Very little attempt

is male at elasticity or to accommodate the individual member; on the contrary, the member is required to adjust himself to the association, IIe must join not when he wants to, but when he can. He can not pay his money in when he gets it, but when the association is ready to take it. If he wants to borrow money the association, through the medium of premium ascertained by competitive bids, so complicates matters that he is wholly unable to calculate the rate of interest he is to pay, and finally, if through misfortune or sickness he is compelled to quit before his shares mature, his rights are enveloped in mist, and he is generally compelled to suffer a forfeiture which embitters him ever after.

First. A member may join at any time. This is accomplished by substantially making each man's stock a separate series. The theory of this is plain enough, the difficulties which suggest themselves being merely the keeping of the books and the division of earnings, both of which will be explained later on.

Second. Paid-up stock is issued. This is a decided innovation. The old theory being that in all cases when stock matured the member was paid in cash and the stock cancelled. It is not issued at all times, but only when the society can profitably loan the money. It may be called in also if a glut of money occurs. It is entitled to share in the earnings like other stock, but dividends when declared, instead of being credited on the book as in the case of running stock, are paid in cash, It may also be withdrawn the same as running stock. In fact, barring the fact that it pays no dues and receives dividends in cash, it has substantially the same rights and liabilities as running stock.

Paid-up stock, however, is an exceedingly useful adjunct to a build. ing association. It gives the association command of a large additional amount of money to loan and thus reduces the rates to borrowers. This class of stockholders is also a little steadier than the book-holders. They are not so easily panicked, nor are they so needy as to require their money at once in case of a stringency in finance or a business depression.

Paid-up stock is also a sort of financial regulator to an association. When money is too plenty, not being obliged to issue it, the doors are closed and a large source of supply is thus shut off. If this does not suffice even outstanding stock may be called in. When, however, the demand for money becomes greater than the supply, paid-up stock being a favorite investment, the association has but to open the gates and money pours in until the equilibrium is restored. By these means the idle cash balance of the association is kept continually small, and yet all really desirable loans can be made, and all other demands promptly met. It must not be supposed, however, that this paid-up stock is held entirely or even largely by capitalists. On the contrary, it is held almost entirely in small sums by the more frugal element in the working classes. In the annual report of the association heretofore referred to, made on January 1, 1893, 2,411 persons appear as holding $867,700 of this stock, or an average of $359.89 per person, while of the whole 2,411 certificates outstanding, 822 were for $100 only.

Third. Probably the most pronounced difference, however, between the Dayton plan and others is in the method of loaning money. Instead of selling at auction to the highest bidder in open meeting the right to borrow money, it is loaned to members at a rate of interest fixed by the board of directors, on the principle of " first come, first served."

The following is a copy of the contract signed by the borrower, which

8100, and suppose the rate of interest agreed upon is 13 cents per week): * $100.00.

DAYTON, OHIO, “Received as a loan from the Mutual Home and Savings Association, of Dayton, Ohio, the sum of one hundred dollars, which sum I agree to repay with 16 dollars per week interest thereon, payable weekly, as follows:

"I hereby subscribe for one share of stock in said association, of one hundred dollars each, book No. 34,641, and I agree to pay to said association weekly, not less than the sum of dollars, which sum is to be applied as follows:

"First. To the payment of any fines, insurance, taxes, or other assessments made against me in accordance with the bylaws of said association. "Second. To the payment of the interest due on said loan.

"Third. The balance of said amount to be applied toward the payment of my said stock subscription. Said weekly payments shall be continued until said stock is fully paid up by the payments applied thereto as above stated, and the dividends declared thereon. I also hereby assign the stock aforesaid to said association as collateral security for said loan, and I authorize it, when said stock is fully paid up, or should I fail for eight weeks to make the payments above stated, at its option to withdraw said stock in accordance with the bylaws of said association, or any or all of the money paid thereon, and apply the amount withdrawn to the payment of said loan, or the interest thereon, or any of the assessments above stated.

"Should any part of said loan or the interest thereon or any of said assessments remain unpaid after the withdrawal value of said stock is 80 applied, they shall become due and payable at the option of said association.

Signed : It will be seen that the loan, so far as it is concerned, is a plain loan at a definite rate of interest, and that the stock which the borrower subscribes for is used as a sort of sinking fund in which to accumulate the money with which to pay the loan. When the money in the fund is sufficient to pay the loan—that is, when the stock matures——the money is transferred from the stock to the loan and the latter is cancelled. While the money is being accumulated on the stock it is entitled to its share of the earnings just as other stock.

It will be observed that the required weekly payment is even 25 cents on each share of $100. The borrower does not pay as in the old associations 25 cents as his dues and an additional sum for interest, fines, etc. Twenty-five cents per week pays the whole bill. The interest, etc.

, is taken out of it and the balance, whatever it is, becomes a credit on his stock. No matter what rate of interest is agreed upon or what fines or other assessments are made, the weekly payment remains the same. The rate of interest merely shortens or lengthens the time it will take to mature the stock and cancel the loan. A borrower there. fore knows exactly what he has to pay from the start to the finish. You will observe also that the weekly payment required is a minimum payment. The borrower may therefore pay as much more as he is able. Whatever payment he makes draws dividends and shortens the time in which his loan will be paid up. It is not expected that every borrower will simply pay the required dues. The minimum payment i made as low as is consistent with safety, and the field is left open f

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