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LETTER OF TRANSMITTAL.
HARRISBURG, May 1, 1889.
Commonwealth of Pennsylvania :
The first inquiry relates to the history and operations of building and loan associations. This, it is believed, will be found instructive and useful; and already several hundred applications for copies have been received. The next portion of the Report is devoted to the subject of miners' earnings. The earnings of no class of workingmen have received so much attention from newspapers and political writers, and yet statements of the earnings of this class have often been further from the truth than the statements of the earnings of any other. Statistics of wages paid by many of the employers of labor, and the time of operating their establishments are also given. These are followed by several papers concerning the employment of labor, labor organizations, technical education, etc. The preparation of that part of the Report relating to worsted manufacturing is mainly the work, by request of the Bureau, of Crawford D. Hening.
The statistics relating to coke production for 1888 appear in this Report. The differences between them and the statistics which have been published elsewhere are explained in the introduction to the table. In compliance with a request to the Bureau the iron ore production has also been obtained, and is very nearly, if not quite, complete.
The Bureau regrets the loss of Capt. J. M. Clark, by resignation. With his accuracy in the use of figures, was shown a zeal and faithfulness in his work, worthy of much praise,
ALBERT S BOLLES,
Chief of Bureau.
THE HISTORY AND STATISTICS OF BUILDING
AND LOAN ASSOCIATIONS.
[The following report on building and loan associations has been prepared by Michael J. Brown, assisted by Joseph J. Paist, both of Philadelphia. For many years they have carefully studied these associations, and are more familiar with them, doubtless, than any other persons in the country. As Philadelphia is the place of their birth in this country, and where they have multiplied the most rapidly, their history is longer and more varied than in other places or States.
Building societies existing in Pennsylvania are, in effect, co-operative savings banks that lend their money chiefly (almost wholly) on mortgages, and therefore assist their members either to build or buy homes. They differ from savings banks in this respect, their deposits are not made in irregular sums at the will of the investor, but in monthly instalments which become compulsory after the first pay. ment. Furthermore, as a rule, they have no dealings with the general public, as their money is loaned only to members.
Building societies and savings banks are not, therefore, rivals except in a general way; each has its own field of usefulness, yet it is desirable to contrast them in some particulars so that the methods and merits of both may be understood A man may, if he desires, deal with a savings bank exactly as he does with a building society, putting in a certain amount of money each month, borrowing from the savings bank and using his accumulated funds to pay off his mortgage. In a savings bank he may do this; in a building society he must make his payments after he has begun, and the accumulated funds must be applied to the discharge of his indebtedness if he has borrowed money. In the savings bank he is simply a depositor or customer having no control in the direction of the business; in the building society he is a partner having equal voice with other members in the management of the business. In the savings bank he receives a fixed rate of interest on his deposits, or a rate fixed from time to time by the directors; in the building society he is a partner, sharing in whatever profits (or losses), may result from the business.
In contrasting the history of building societies with that of savings banks, the objection has often been made that the former have often charged too high a rate of interest, which has unduly burdened the borrower. It is true that the average rate is considerably higher than
the rate charged by savings banks, but the borrowers are also thelenders, and, therefore, if they pay a high rate for money, they also receive a high rate on their investment. Savings banks, on the other hand, if charging a low rate of interest, pay a low rate to the investors, who to a considerable extent, as we shall show before concluding, are also borrowers of money. This argument, then, against building and loan associations is not a particularly strong one, and certainly has not been strong enough of late years to deter their rapid growth. While savings banks are flourishing, building and loan associations are equally, if not more so; their members well understanding the difference between the rates of interest charged by both, and the reasons therefor.
It may be remarked that the loans of savings banks are largely made to men of small means desiring homes; their deposits, therefore, are consecrated to the same purpose as the deposits or investments by members of building and loan associations. It may also be fairly claimed for savings banks that their primary double object has been to encourage deposits by persons having small means and the lending of the same to persons who were desirous cf securing homes for themselves and families. A very large portion of savings banks deposits are secured by mortgage on real estate. In some of the States stringent laws require them to loan fifty per cent. or more of their deposits on such security. The object of these is to aid people who are desirous of securing homes. There is, then, not such a wide difference between the aims of the two kinds of associations as some people suppose; but this must be said of building and loan associations, that their entire receipts are devoted to this purpose; that this is not only the primary but the sole object of establishing them, while savings banks, to some extent at least, divert the money of depositors to other purposes. The depositor or investor in a building and loan association has always in view the building of a home either for himself or for some of his co-members, while the savings bank depositor is chiefly thinking of his dividend when investing his money,
, without much thought of aiding those around him in securing homes or in other ways.
One reason why building and loan associations are able to make such good dividends is because their expenses are small. Economi. cally managed as savings banks often are, their expenses are much greater than those of building and loan associations. Thus, in a recent number of a Philadelphia paperit was asserted that the average annual expenses of one hundred and twenty of these associations, located within the State, amounted to only three hundred and seventyeight dollars, including the secretary's salary, which averaged two hundred and twenty-five dollars. The salaries of six secretaries in societies whose assets amount to $563,000, were only $1,368, or an average of $228.
Certainly savings banks can make no such