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is made at elasticity or to accommodate the individual member; on the contrary, the member is required to adjust himself to the association. He 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

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 It may also be withdrawn the same as running stock.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 equilibriun 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 I think will largely explain itself. (For convenience I make it a loan of $100, and suppose the rate of interest agreed upon is 13 cents per week): 66 $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 10 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 tbereon, 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 so 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 saine. The rate of interest merely shorteus 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 finishi. 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 clues. The ininimum payment is made as low as is consistent with safety, and the field is left open for each man to pay off his loan as soon as he can. He may, therefore, pay it up in five years, or one year, or even in one week, if he wishes. For the same reason he may pay off his loan at any time whatever. The minimum payment only being fixed, le may pay at the time the whole balance due on the loan and have it cancelled, paying interest of course only up to the date of cancellation. A borrower may also, at any time, pay up one or more of his shares, and have the amount credited on his loan and interest stopped to that extent.

Fourth. As to the distribution of earnings: Under this plan it is a very simple matter. Every six months the earnings are ascertained. As they cousist almost entirely of interest paid, this is soon done. Out of this first comes the expenses. Then tlie Olio law requires that 5 per cent be set aside to a fund out of which all losses are paid (when, however, this fund reaches 5 per cent of the outstanding loans this is no longer required). The balance is then divided among all the members in proportion to the amount standing to the credit of each member. The amount standing to the member's credit at the begin-, ning of the six months, unless since withdrawn, is the basis of the distribution, but an allowance is also made to members on the required payments made since that time. On all running stock this dividend is credited to the member's account, and thereafter is regarded just the same as money paid. On all paid-up stock the dividend is paid in cash. The exact money value of each man's stock being thus ascertained at the close of each six months, tlie matter of withdrawals is also made casy. The amount in the loss fuud represents the risk in the outstanding loans. Every man's account is therefore worth its face. He is, therefore, allowed to withdrawany or all of the amount standing to his credit, dividends and all, by giving two weeks' notice, provided the money is in the treasury. If it is not, his notice is filed and he is paid in his order as fast as the money comes in.

It will be further observed that in the above method of ascertaining and dividing the earnings the number of shares a man holds cuts very little figure. The money paid in on them is the basis of the calculation for dividends. This has a inost important side effect.

The money actually paid in by a member, not what he ought to have paid, as in the older plans, is the basis of dividends. It is, therefore, no longer necessary to insist that a member, not a borrower, should make the payments his shares call for. No attention is, therefore, paid as to whether a non-borrower pays upor not. If he does not it is his own affair; nobody but himself is tlie loser. Neither are fines ever assessed on thé non-borrower. No attention is paid to him except to adjust his dividend in accordance with his payments. The effect of this has been surprising. Nobody can estimate the number of people who have been deterred from joining building associations by the fear that they might not be able to keep up their payments after they were in, and would be fined and otherwise mulcted in consequence. They were the very best and most prudent people, too. The ignorant and the thoughtless may be induced to assume burdeus which they are not sure they can carry, but the intelligent and the thoughtful will hesitate. At any rate this fact, together with the ease and certainty with which money may be withdrawn, and also the further fact that no initiation fee is required, has led to a regular stampede to join building associations in the city of Dayton. Over 10 per cent of all the people in the city, men, women, and children, belong to this one associatioù alone, and there are a number of other good associations also.

The popularity of these associations in Dayton can not be better

illustrated than by comparing the population of the city with the number of members of the various associations. The population of the city in 1890 was 65,500. It has been growing rapidly since, but an outside estimate would hardly give it over 80,000. The membership in the various associations on January 1, 1893, was 19,886. Of course in a few instances the same person is a member of more than one association, but, nevertheless, the figures are almost startling. Probably more people belong to such associations in the city of Dayton in proportion to its size than in any other city in the world.

The rule as to fines need not be so strictly enforced even against borrowers as is necessary under the old plans. The borrower gets credit for only what he pays, and if the security is ample the society suffers no pecuniary loss if he does not pay promptly. Consequently, fines are seldom assessed to any great extent. The association before named collected only $160.30 in fines in 1892, although its gross receipts were over $1,800,000.

It only remains for me to answer some queries which will naturally arise as to the bookkeeping. It is undoubtedly true that in small associations the labor of keeping the books is somewhat increased under this plan, as an individual ledger account must be kept with each member. On the other hand the books are ever so much better even in a small association, and it is wholly impossible to keep correct books in an association of any size under the old plans. It is almost impossible to give any satisfactory explanation of the methods of bookkeeping in any reasonable space. T'hey must be seen to be understood. In general, however, a weekly payment journal similar to those always in use is kept, in which is entered all payments in the proper column for the current week and opposite the name of the member. It is ruled to last six months, and at the end of that time the amount paid is transferred or posted to the individual account of the member in the ledger. There is, however, this difference: The weekly payment of the borrower is not separated into dues, interest, fines, etc., in this jourual. Only the bulk sum paid is entered. The interest, fines, etc., are charged every six months to the borrower's individual account in the ledger, and when, at the end of the six months, the bulk sum of his payments is also posted to his account, a balance is struck. This is an enormous saving in bookkeeping and in handling cash. The weekly payment is the same for both borrower and non-borrower, being 27 cents on each share of stock. It is even money also, and avoids the handling of much small change as is necessary when the payment is separated each week, the interest nearly always comprising odd cents. The semi-annual dividend is credited to each man's account in the weekly journal as the first payment of the six months. Of course many other minor details are not touched upon, but they are only such as would naturally suggest themselves to a bookkeeper. In a large association a greater subdivision of accounts can be made, each with its appropriate book, and intricacy be thus further avoided.

The special tables lettered from A to Q, inclusive, which have been analyzed in the preceding portion of this chapter, immediately follow:

H. Ex. 209- -22

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23 23 Arizona Arkansas.

32 32 California.

125 121 Coloradlo.

42 Connecticut

15 15 Delaware .

21 21 District of Columbia. 26 Florida

21 21 Georgia.

31 31 Ilaho.

1 Illinois

631 631 udiana.

420 427 Iowa.

81 81 K:18as

71 71 Kentucky


131 Louisiana.

26 Maine

29 29 Maryland..

237 230 Massachusetts.

115 115 Michigan.

72 72 Minnesota

82 82 Mississippi.

30 30 Missouri.

319 349 Montana

7 7 Nebraska.

66 66 Nevada.

1 1 New Hampshire

16 16 New Jersey.

286 286 New Mexico

5 5 New York

300 390 North Carolina

21 24 North Dakota

5 5 Ohio

718 715 Oklahoma..


1 Oregon

14 14 Pennsylvania. 1,076 1, 065 Rhode Island

6 6 South Carolina

48 47 South Dakota..

14 Tennessee

61 61 Texas

39 39 Utah

5 5 Virginia

76 76 Washington

14 14 West Virginia.

54 Wisconsin

39 39 Wyoming

6 6

5. 8 6. 2 6.0 3. 7 8.3 5.7 4. 3 8.7 5.8 4.7 5.6 5. 5 4.0 2. 2 8.6 4.6


10 153

5 46

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2 114


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1 a (no 30 years, one 33 years, and one 38 years. bOne 30 years, one 33 years, ono 35 years, ono 37 years, ono 38 years, and ono 42 years.

5. 0

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