1893 - State Library Information Center

CO-OPERATIVE BUILDING AND LOAN ASSOCIATIONS. 551known quite a number who became discouraged under the load,got reckless and let go, requiring very great watchfulness andcare upon the part of the directors that they did not involve theassociation in a loss, through unpaid taxes, assessments anddeterioration of the property before title could be procured.I hold, then, first, that the association should be mutual, thatis,, BO planned that all shareholders, investors and borrowersshould share alike in the profits.Second, that the investor should get a fair return for his money,combined with safety or good security and liberal treatment, withprompt payment upon his withdrawal.Third, the borrower should be, treated with all the liberalitypossible, coupled with the requirement of undoubted security,though the margin at first may be small, as every month's paymentmakes it safer.Fourth, the directors, who give valuable time and experiencegratuitously, should, while giving their earnest, careful attention .to all the interests of the association, not have unnecessary laborin watching the security or property of borrowers, nor in auditingsystems of accounts which are complicated.Based on these four principles, the first of which distinguishesthe true building and loan association from all private or nationalimitators, what should be the premium plan of the association ?There are many features of premium plans in use, but I thinkthat they can all be reduced to two plans which embody the perhapsconflicting ideas of the organizers and the main pointB ofall. First, there is what I call the Gross Premium Plan. Second,we have what \ shall term the Monthly Installment Plan.By the gross premium plan, I mean that plan by which theborrower bids a certain percentage upon the amount he is toborrow, and which percentage is either deducted in cash at onceor the amount is added to the loan and is repaid in, say, 12ft.monthly payments.The Bureau of Statistics of Labor informs us that the gross*premium plan is used by the greater number of the associations*in this State.It is profitable, but it is not just, and hence is not mutual,I do not know how many of the associations continue the planof deducting this gross premium in cash, but I do know that by