showing as this in their expense account. One can readily see a fair dividend in the saving of expenditure thus effected. The explanation for their greater economy of management is very simple. They have no offices, their business is conducted for the most part in the evening after their members have finished their daily work, and no one is paid except a secretary, while he, as we have seen, receives but a small salary. The savings bank has a building and clerks, and while none of the salaries are excessive, yet the annual expenditure is considerable, especially in the large cities where rents are high, and where the leading officers, at least, must be paid a considerable sum for managing them. The objection may be made that this unpretentious and cheap mode of doing business leads to more irregularities and losses than is the case among completely organized institutions, whose officers are regularly paid, and who devote their chief time to the management of the business. It is remarkable, though, how small have been the losses in building and loan associations, so far as we are able to ascertain. The explanation is simple. The members are investors as well as borrowers. They, therefore, watch over their interests with greater keenness probably than any other class of investors. The ordinary savings bank depositor takes no part in the management of his association. The genesis of one clearly shows this. How is a savings bank started and conducted? Several men, believing that such an institution is needed in a place, meet together and determine to apply for a charter for such an association. They include themselves and others as incorporators and trustees. The charter is granted to these individuals, and authorizes them to meet and organize for the purpose. They select from their number those who are to serve as directors, who in turn select the treasurer, secretary and clerks, who are to conduct the business. Whenever a trustee dies, the others select another person to fill his place. The depositors have nothing to do with the selection. All is, in truth, left to the original trustees and their successors. The efficiency of a savings bank, therefore, depends entirely on their honesty and ability. This is true alike of those savings banks that are started for commercial profit, and for those organized, as some in this State are, for purely philanthropic purposes, and which have capital or assets greatly in excess of their deposits. As a whole, the history of savings banks in this country is a good one. It is a beautiful and interesting chapter in the history of American institutions; but this brief diagnosis of a savings bank clearly shows that the depositors are not so intimately connected with its management as the investors of building and loan associations are with their institutions. They are not only the creditors, but at all times the managers and guardians, and so loss through irregularities or mismanagement of any kind have been very slight. It is true that losses have sometimes occurred among building and loan associations. Occasionally, the loan has not been properly secured; but savings banks have a worse history in this regard. Their losses on some occasions, carefully made as their loans were, have been large. Usually, a savings bank endeavors to have a security worth at least twice as much as the money loaned. This would seem to be a sufficient margin to protect it against every hazard, but more than once the value of property has depreciated rapidly, and this margin has been swept away and more besides, so that loss in the end was sustained. During the panic of 1873 and the long depression that followed, there were many losses of this kind arising from an enormous decline in the value of the security taken. Building and loan associations, while suffering in the same manner, have certainly suffered much less than their rival associations. But building societies have other sources of security arising from their methods of doing business. They are usually small, formed by members personally known to each other; their officers and managers are personal friends or acquaintances of nine-tenths of the members; their business is transacted for the most part in the presence of at least some of the members; the treasurer has control at any one time of only a small amount of money not much in excess, if any more, than the bond he has given to the society; the money loaned is secured not only by the mortgage against real property, but by the stock of the member given as collateral security, and the latter is constantly increasing in value so that if the loan as originally made is secure, it becomes by lapse of time more secure, and this increased security from the collateral usually offsets any unexpected depreciation in the value of real estate and consequently of the mortgage. The losses that have come to building societies have been in many instances more fanciful than real; they have been losses of expected rather than of accrued profits, and in nearly all cases may be traced rather to ignorance of true principles than to intentional dishonesty or mismanagement. In rare cases (so rare that they scarcely deserve mention) officers becoming involved in private speculations have become dishonest, but their opportunities for embezzlements have been so small that in no recorded instance within the knowledge of the writer has there been a loss of money actually invested. Profits have been wiped out, or nearly so, but investors receive at least the amount of money they have paid in. Other sources of apparent loss have been due to a false division of profits arising from a misunderstanding of the effect of issuing stock in series. For a time there prevailed a false division of profits which took from later series and gave to those maturing money not yet earned. This has been corrected and is only mentioned to explain some of the former troubles through which building societies have passed, but which no longer beset them sive fines,* but these militated against the borrowing members chiefly and not against the society. It may also be said in favor of building and loan associations that they have a better knowledge of their security, than the managers of savings banks have of the securities taken by them. Usually, a savings bank has a committee on real estate, who investigate into the worth of a security and make a report to the directors, on which action is based in making the loan. This committee consists, perhaps. of three or five persons, intelligent and trustworthy men, but who, after all, however careful they may be in their inquiries and investigations, fail to ascertain its value as accurately as the members of building and loan associations do of the value of the property on which their loans are made. For let it be remembered they are almost always workingmen, well knowing the nature of the houses taken for security, the cost of building them, and all the particulars concerning them; and consequently there is hardly any room for mistake or error in loaning their money. It is quite impossible to conceive of a business which can be conducted more intelligently and with greater security in this regard than the business of these associations. It may be asked, would it not be well to subject these associations to a State investigation of the same kind as savings banks are in many States? There are two sides to this question of State superintendence. Whenever these officials have been efficient, they have performed good work and have doubtless prevented frauds, and more often losses from inexperience or unintentional mismanagement; but everything depends on the efficiency and integrity of the official. A poor official is far worse than nobody, for then he serves as a blind to delude the public and the stockholders or depositors of these institutions. A depositor thinks everything is all right in his bank, because the State superintendent says so, when in fact, as has been too often shown, a mere shell has been kept in existence for years whose inside had long ago been lost by mismanagement or fraud. In this State banks of no kind have been subjected to State superintendence, although the wisdom of doing so has been often asserted. A bill for that purpose has been introduced several times into the Legislature. Another point of comparison worth mentioning is that fixed times for paying into these institutions tend to the formation of the habit for saving, and the growth of prudence. The savings bank depositor can pay into his bank whenever he pleases, and draw out his money usually without notice. While, of course, this plan has some advantages, it does not enforce economy and prudence like a plan calling for fixed payments, which is the case with building and loan associations and life insurance societies. Extravagance is restrained, the virtue of self-denial is practiced, and thus men get a more complete *Corrected by the act of 1879. mastery over those elements within and without which hinder their growth. The crowning glory of these institutions is that their funds are devoted to a single purpose, the purchase of houses for workingmen. That they have been singularly successful cannot be questioned, for the conclusive proof is before our eyes. A stranger, hastily looking over Philadelphia, remarks on its uniform and modest appearance, and is too apt to draw an unfavorable comparison with New York. His judgment is founded on a slight examination of both cities. Had he gone through the miles and miles of streets in Philadelphia lined with comfortable homes he would have concluded that, after all, the elegance of New York is for the few, while the comfort of Philadelphia is for the multitude. In Philadelphia more people own their own homes and enjoy a larger degree of comfort and independence, and possess a more healthful conservatism than the people of any other city in the world. A house-owner and taxpayer is a conservative citizen; he will never become infected with the spirit of anarchy. One of the best proofs of this is, in recent years, when so much agitation and disquietude have existed in many places, Philadelphia has been as peaceful as a country village. The existence of so many house-owners there is due is due in no small degree to the influence and methods of building and loan associations.-CHIEF OF BUREAU.] BUILDING AND LOAN ASSOCIATIONS. As early as the year 1852 a Mr. S. K. Cox published at Charleston, South Carolina, a little book, entitled "Mutual Benefit Building and Loan Associations." His reference to these associations was coucheď in the following language: "The present age, so remarkable in every respect as an age of progress, in nothing more deserves this distinction than in its many organized efforts to elevate and improve the condition of the humbler classes of society, to break down the aristocracy of rank and wealth, and raise mankind to a level of a common brotherhood. We do not refer to those wild Utopian schemes of communism, which, by destroying all legitimate rights and distinctions, sap the very foundations of social order and prosperity; but to the many means of a sound and practical nature, that look to the right development of individual character and enterprise, that hold forth to honest industry its proper reward, and to the lowest the hope of promotion; and which, by relieving the poor of the degrading privations of their lot, enhance their comfort, respectability and usefulness. Few existing organizations are likely to contribute more to these Their Primary Object. The primary object of these associations is to enable every man to become his own landlord-to purchase a home for himself and family by paying into a joint concern, for a few years, but little, if any, more than would otherwise have been expended in rent. By uniting the savings of their individual members, a capital is created and distributed into and among the hands that rear it. It is evident, that many individuals combining together can make small sums of money far more productive than these sums can be made separately. When it is considered that a number of persons save money by the mere process of hoarding, and without making one farthing of interest, that money thus saved is of no use to any one while the saving is in progress, and that by the instrumentality of building associations money is, from the very commencement, kept actively employed, continually producing and re-producing at a wonderful rate of increase, and yet loaned to the borrower on more advantageous terms than by any other kind of loan, the usefulness of these associations becomes manifest. In fact their Leading Principle is, that r oney makes money if well used. It is the aim of these associations to enable persons in the humbler ranks of life to become owners of real property instead of mere renters of it. By the old system of house-tenancy, the many pay rent for the benefit of the few; through the building and loan association the many combine together so as to put the rents into their own pockets. Their Principles Explained. The principles of building association management are as follows: Every borrower is always a member and an investor. Investors or members contribute $1 per month per share until each share, including the profits in the business, reaches the ultimate value of $200. In many of the associations the shares reach maturity in about one hundred and forty months. (If associations demand a premium on all funds that are loaned, of course, they mature in less time). At one hundred and forty months without a premium the account would stand as follows: One hundred and forty months, at $1 per month, Total value, . $140 00 60 00 $200 00 Profits for above Period or the Term. No person is allowed to borrow from the society unless he is a member or becomes one. The society will lend a member $200 on each share to which he is contributing. When there is a demand for the money, by reason of several members wanting it at one time, the borrowers bid a pre |