1893 - State Library Information Center

CO-OPERATIVE BUILDING AND LOAN ASSOCIATIONS* 465his holdings large or small, be he investor only or borrower also,be he successful or unsuccessful as the world counts success, istreated with equal justice, and is afforded equal opportunity toenjoy the benefits of co-operation. This is the foundation onwhich building associations rest. The ideal association is mutualin the full sense of the word. Every member participates in theprofits, shares the losses, and contributes towards the expenses,in exact proportion to his interest in the association.la what respects do our associations in their plan fall short ofthis ideal ? The defectB of management greatly limit the usefulnessof many associations, but it seems to me that the fundamentaldefect of our building associations is found in their unfairtreatment of borrowing members, in exacting, varying and oftenexcessive premiums. These premiums, it is true, are an importantsource of profit to the association; but are not the profitsof most of our associations too great?A borrower with fair real estate security can usually negotiatea loan at 6 per cent, interest—frequently at 5 per cent. A borrowerin a building association not only furnishes real estatesecurity, but adds to the security the amount of his dues eachmonth. Why should he pay a higher rate of interest in orderthat investing shareholders may receive what would be consideredoutside of building associations usury ? Is any asociation whichreports ten, twelve or fifteen per cent, profits a year, dealingjustly with this class of its members ? For the association beingmutual and having no outside source of income, it follows thatthe net earnings must always, be less than the interest actuallypaid by the borrowers, the difierence representing the expensesof the organization.Are we not all taking undue advantage of the necessities ofour borrowers, or deluding them with the fallacy that excessivepremiums, by hastening the maturity of their stock, are notdisadvantageous?II the association has only a small profit from withdrawals, as.it should have; enough premiums to help defray the expenses ofmanagement, and to provide for possible losses—that is, to insurethe loans—might equitably be charged to every borrower in additionto legal interest; but the premium should be uniform inamount to all borrowers at the same time, and should be rarely31