1893 - State Library Information Center

CO-OPERATIVE BUILDING AND LOAN ASSOCIATIONS. 453that they are going to give the necessary time to examine into acomplicated system for the division of profits when a muchsimpler one can be had.If the other system, that of adding the amount of the agreeduponpremium to the mortgage, is adopted, and the total of loan,premium and interest is divided into 120 monthly payments, agreat deal of this complication in accounts is done away with, asthis plan then virtually becomes the monthly installment plan;but this system usually carries with it the closing out of theborrower as a Bharer in the profits, and this feature I condemnas being entirely contrary to the mutual spirit of the association.I have assumed thus far that in both of these features of thegross premium plan, in case of a repayment of the loan beforematurity, the unearned portion of the premium is credited onthe payment; but it has been the case, and may be yet, when nopart of the premium was returned, no matter for how short atime the loan had run.This simply makes the plan all the more unjust, objectionableand almost indefensible in a mutual association.Opposed to thiB perhaps profitable but burdensome, unjust andtroublesome plan, we have the other, the Monthly PremiumPlan, by which the borrower knows at the outset juBthow much money he is to receive, makes his plans accordingly,and takes his loan with confidence, knowing that whether heremains to the end of the serial period or pays oft his loan beforematurity, he has not paid for more than he has received. It isthe sound business principle to pay as you go and stop payingwhen you get through, which is good for a loan as for any otherbusiness transaction.The accounts can be simplicity itself; every dollar received isearned (except, of course, advance payments), and can be chargedat once to the proper account and series where any director cansee, understand and prove it when necessary.ALthough under this plan the profits may not at first appear tobe so large, they are quite as large as is good for the permanentbenefit of the association and large enough to attract all the investingcapital needed.Indeed, this constant monthly income from the premium account,through bad times as well as good, during seasons when