ANUAL FOR LIBRARY UNIVERSITY OF CALIFORNIA. Deceived Accessions No. 3 I 8 ^t-. Class No. MANUAL FOR Building ond Loon jlssoGiotions, EMBRACING The Origin and History of Co-operative Societies; Objects and Benefits of Building Associations; Plans and Methods oj Organizing and Conducting them; Leagues; Legislation; Constitution and By-laws; Forms and Description of Books, Blanks, and Papers; Interest and Dividend Tables; Auditing and Supervision; The " National" Associations; and a Comprehensive Variety of Prac- tical and Useful Information and Suggestions. BY HKNRY S. ROSBSNTHAL,. EDITION. REVISED AND ENLARGED. j^^-^l^ HAI, & COMPANY, CINCINNATI, 1891. COPYRIGHT, 1891, BY HENRY S. ROSENTHAI,. Si ^ s 4- PREFACE TO SECOND EDITION. IT IS with pleasure that a revised and enlarged edition of the MANUAL FOR BUILDING ASSOCIA- TIONS is presented to the public. The first edition was sent forth under a feeling of uncertainty. It was a pioneer in a new field. The territory was one of rich promise, but as yet unexplored and unoccupied. In presenting what purported to be a guide to this region there was a heavy responsibility assumed. But all that was expected and hoped of the build- ing association system has been and is still developing. The building association is now a fixed institution, with its mission and its limitations well defined. It has secured universal recognition, and is working out its own destiny. It is not yet perfect, but under the operation of evolutionary processes, theories, plans, and detail operations, are steadily progressing and im- proving. The material out of which to make such a book as this has increased wonderfully during the three years which have elapsed since the first edition was issued. Numerous books on the subject have been published, during this time. Many special articles on the subject (iii) iv PREFACE. by students of economical questions have appeared in leading periodicals. In a number of the states the leading newspapers now carry regular building associ- ation departments, while in almost every newspaper in every state articles relating to this subject appear from* time to time. At league meetings, conferences, etc., many special papers have been presented and discussed. Comprehensive and valuable statements have been prepared from time to time for presentation to legislatures in connection with requests for legis- lation. Numerous periodicals devoted to this subject have been established in different parts of the country, and some of them have developed into very able pub- lications. In several states official bureaus have been established for the supervision of the work of associa- tions, and the collecting and tabulating of information in connection therewith. From all these sources there is now an aggregate of information which was unknown when the MANUAL first appeared. It has been a source of gratification that so little was found in the first edition for criticism. The book met with almost universal commendation, and has been accepted and adopted generally as an authority in its field. In the present edition every- thing of value in the first edition has been retained. There has been careful revision of the entire text, correcting and elaborating where necessary, omitting and condensing where possible. New topics that have come into special prominence have been taken up and treated in full. Among these may be men- tioned the chapters and passages devoted to Auditing, Leagues, State Supervision, Legislation, etc. Such matters as these have grown into prominence out of PREFACE. v the necessities of the system itself. The magnitude which the operations of associations have reached, and the evident immense growth that awaits the system in the near future, make these matters of great import- ance, and hence they have been given most serious consideration. The popularity of the association system has not only developed dangers within, but has invited dangers from without. Unscrupulous schemers are seeking to take advantage of its popularity and the confidence of the public in it to float wild-cat schemes of different kinds, with the deliberate pur- pose of defrauding and robbing the inexperienced and the unwary. Their favorite plan is to establish what they call a "National" building associations and to invite and induce unsuspecting victims in all parts of the country to turn their savings over to their crafty keeping. Inasmuch as hundreds of thou- sands of dollars have already been fraudulently collected and held in this way, and loss and disaster have come in consequence to many thousands of hard- working and worthy people, and since this is done under the guise of a building association and the genuine and legitimate institution is thereby brought into disrepute, it has seemed worth while to give special attention to this subject also. A proper understanding of the real nature of the principles of co-operation as applied in a building and loan association will show every one the impossibility of the fulfillment of the promises held forth by the managers of these insti- tutions. There are numerous other minor changes and improvements in this edition which will be noted by the careful reader. vi PREFACE. The author gratefully acknowledges his obligation to the many persons and sources from which, directly or indirectly, he has derived information. This edition, like the former one, has been prepared in the midst of pressing business duties and cares, and minor imperfections may have resulted in consequence. H S. R. Cincinnati, October 1891. PREFACE TO FIRST EDITION. THE RAPID multiplication and the remarkable development of building and loan associations in the United States have, given rise in all parts of the country to a very general and popular demand for specific information in reference to proper methods for organizing and conducting these institu- tions. So numerous and urgent have been the requests coming to the writer for information of this character that he has somewhat reluctantly under- taken the preparation of this book. The building association, in its present popular form, is such a recent institution that the literature in connection with it is, most of it, yet to be written. The organization and management of associations has been discussed by a few writers incidentally in connection with treatises upon general co-operative work, or in a fragmentary and partial way through newspaper and magazine articles, or in a local way in reference to the work of associations in particular cities or states, or in a professional way in works intended and fitted only for the use of the legal pro- fession. It has been the effort, in the preparation of the present work, to compile from all the various sources (vii) viii PREFACE. of information, and to record from a somewhat ex- tended personal experience and observation in the actual workings of associations, a manual of popular information in reference to this subject. The undertaking is a difficult one from the fact that the plans of conducting associations, and the laws relating to them in the different states, are yet in an experimental stage, are not all uniform, and are subject to constant changes. The greatest care has been exercised to make all statements accurate and practical. The facts, con- clusions, and suggestions given are based upon legal enactments, judicial decisions, and approved practice. It has been the purpose to make the book simple and comprehensive. The building association is pre- eminently an institution of the common people and this book is intended for their use. The effort has been, to include all the information of a general and specific character which is necessary to enable intelligent working-people in any community to organize and conduct a successful association. Until a larger experience shall have discovered the best methods for conducting associations and shall have developed greater uniformity in the legislation governing them, the preparation of a work of this kind that shall be entirely complete and satisfactory will be impossible. The hope may be expressed that the day is not far distant when the same principle of co-operation which now exists among members of particular associations may be put into operation among the associations themselves resulting in the organization of local, state, and national leagues, through which uniformity of operation and legislation PREFACE. ix may be speedily secured, thus insuring greater economy and better security in the management of the business of associations and greatly multiplying their popularity and usefulness. The author thankfully acknowledges his indebted- ness to Mr. A. A. Winters, Secretary and Attorney of the Mutual Home and Savings Association of Dayton, Ohio, for the use of reports and circulars; to Messrs. Charles Beuzer, Henry L,. Smith, and W. L. Davis, some of Cincinnati's best known secre- taries, for the use of dividend tables; to Mr. H. A. Rattermann, Secretary of the Executive Committee of the first Building Association League in Hamilton County, Ohio, for valuable information and assistance ; to Mr. H. H. Muller, and other secretaries and officers, for various practical and critical suggestions ; and to Mr. Oscar B. Todhunter for editorial assistance. Free reference has been made on all legal questions to the very valuable work of Mr. G. A. Endlich, "The L,aw of Building Associations." If the following pages successfully impart the in- tended information and aid in bringing to individuals and communities the advantages which follow the establishment of building and loan associations and correct methods of conducting them, the author has accomplished his purpose. HENRY S. ROSENTHAL. Cincinnati, Ohio, August, 1888. TABLE OF CONTENTS. CHAPTER I. CO-OPERATIVE SOCIETIES. What is co-operation ? Origin of co-operative societies. Result of conditions. Varieties. Co-operative stores. Co-operation abroad. In the United States. 1519 CHAPTER II. BUILDING AND LOAN ASSOCIATIONS. \ Objects and characteristics. Advantages of membership. Early history. In the United States. Benefits and influences. Probable future. 2034 CHAPTER III. \J FORMS OF ASSOCIATIONS. The terminating plan. The serial plan. The perpetual or permanent pi; The "National" plan. 3544 CHAPTER IV. BUILDING ASSOCIATION LEAGUES. Necessity for co-operation. How to form a league. What a league can do. League membership. A national league. 4550 (x) TABLE OF CONTENTS. xi CHAPTER V. LEGISLATION. Its necessity. Statistics. In England. Provisions of the English law. Defects in the English law. In the United States. Litigation. 5157 CHAPTER VI. HOW TO ORGANIZE. Necessary conditions. Preliminary steps. Choice of name. Capital stock. The constitution. By-laws. Incorporation. Officers. Headquarters. Meetings. New legislation. 58 67 CHAPTER VII. STOCK AND STOCKHOLDERS. Stock and stockholders. Increase of stock. Stock as property. Shares transferable. Stock payments or dues. Paid-up stock. Other facts concerning stock. 68 75 CHAPTER VIII. DUTIES AND RIGHTS OF MEMBERS. Membership. Duties of members. Fines and forfeitures. Rights of members. Corporate rights of members. Rights as investors. Dividends. Right of withdrawal. Rights of borrowers. Duties of borrowers. 76 89 xii TABLE OF CONTENTS. CHAPTER IX. LOANS AND SECURITIES. Sale of money, Premiums. Nature of a loan. Mortgages. Other securities. Assignment of stock. Sale of securities ; disposition of proceeds. Appraisement of real estate. 90 98 CHAPTER X. CORPORATE GOVERNMENT. The corporate meeting. General meetings. Special meetings. Management of corporate meetings. Officers : their election and general powers. 99105 CHAPTER XI. EJECTION AND DUTIES OF OFFICERS. Officers required. Elections. Duties of president and vice president. Duties of secretary. Assistant secretaries. Duties of treasurer. Duties of directors. Duties of trustees. The attorney : his appointment, duties, and compensation, Bonds of officers. Responsibilities of officers. Remuneration of officers. Salary of directors. Salary of secretary. 106 126 CHAPTER XII. POWERS AND LIABILITIES. General powers. Perpetual succession. The corporate seal. Contracts and agents. Suits. Rules. Special powers. Dissolution. 127133 TABLE OF CONTENTS. xiii CHAPTER XIII. PRACTICAL, QUESTIONS ANSWERED. Borrowing money. Tables : loans and deposits. Contingent or reserve fund. Undivided profits. Mortgages : custody, recording, etc. Insurance policies as collateral security. Leaseholds. Taxes and assessments. Payment of dividends. Dues, deposit slips, etc. Paying off shares. 134 T 55 CHAPTER XIV. AUDITING: ITS PURPOSE. General considerations. Purposes of auditing. Protection of corporate interests. Protection of members. Statutory and constitutional requirements. Economical, labor-saving, and simple methods. The balance sheet. The auditor the representative of the members. The selection of an auditing committee. ualifications for auditing, isqualification of auditors. Assistance from officials. Change of auditors. Compensation of auditors. 156 175 CHAPTER XV. AUDITING: ITS METHODS. Uniformity impossible. Care of books. Special hints. False accounts. Errors of omission. General outline. Share contributions. Proving of cash balance. Secretary's cash book. Treasurer's cash book. Members' ledger. Withdrawals. General ledger. Assets and liabilities. Auditor's report on special matters. Auditor's certificate. Safety insured. State supervision. 176 196 TABLE OF CONTENTS. CHAPTER XVI. DIVIDEND AND INTEREST TABLES. Calculation of dividends and interest. Application of profits. Illustration. Tables. Simple interest. Division of profits in serial associations. 197255 CHAPTER XVII. LEGAL FORMS FOR ASSOCIATIONS. Necessity for correct blank forms. Specimen blanks. Articles of incorporation (Ohio). Subscription list. Proxy on stock. Bond of officers (Ohio). Mortgage (Ohio). Mortgage (Kentucky). Mortgage clause for insurance policies. Mortgage collateral note on shares of stock. Mechanic's lien (Ohio). Collateral note for loan on pass book. Attorney's report. Certificate of paid-up stock. 256 272 CHAPTER XVIII. REPORTS. Their necessity. Legal requirements. Preparation and publication of reports. Secretary's balance sheet. Specimen reports. 273 282 CHAPTER XIX. General suggestions. Book account. Pass books. Deposit envelopes and slips. Necessary books and forms. Building association supplies. 283 295 APPENDIX. Constitution. By-laws. Rules. CHAPTER I. CO- OPERATIVE SOCIETIES. WHAT is CO-OPERATION ? Co-operation is a term applied to a system of united and concurrent effort or labor for some par- ticular end. The specific object of co-operation is usually of a commercial or industrial character. Co- operation as a system consists in a joint-stock co-part- nery on ordinary commercial principles with limited liability of members. By the adoption of wise, pre- cautions and prudent methods, and through the inter- position of judicious legislation defining corporate powers and protecting individual interests, the prin- ciple of co-operation does much to encourage self- denial and thrift on the part of individuals, and to develop and foster the material interests and moral welfare of communities. ORIGIN OF CO-OPERATIVE SOCIETIES. The principle of co-operation when applied in practice results in the organization of a co-operative society. Such societies are almost coeval with civil- ization itself. They have existed in some form or another in every enlightened nation. There is no very well authenticated history of the exact form and (15) 16 MANUAL FOR operations of the first co-operative societies. It is evident however that, as a rule, they existed upon a crude and restricted basis. It is only within modern times, and especially during the last half-century, that they began to assume the high character and great importance that now attaches to them. RESULT OF CONDITIONS. Wherever co-operative societies have existed and for whatever purpose, they have been the same in essential plan and nature. They spring up out of the same conditions and minister to the same necessities and achieve the same results. For the organization of such an association, there must be a considerable population, made up chiefly of persons of small means and dependent upon their daily labor or business for their incomes. The people must possess a good degree of intelligence and similarity of interests and tastes, and there must be a strong element of mutual trust and dependence. These conditions are found to the greatest extent among the manual-laboring classes, and clerks, shop and store assistants, etc. It is only by uniting their meager earnings that these classes can slowly raise their capital to an effective bulk. When this is done upon an economical and prudently devised basis, advantages are secured which would be impossible to the members as in- dividuals. The great bulk of population in all countries is made up of people of these classes and conditions. Their necessities everywhere are the same, and hence it is not a matter of surprise that we find much similarity in the efforts made to meet these necessities. BUILDING ASSOCIATIONS. 17 VARIETIES. Co-operative organizations have been formed under a great variety of names and for a multiplicity of purposes. But, whatever the name and whatever the purpose, their essential character is the same. Mem- bership in the organization is secured upon some equitable basis by the payment of shares. The traces of such organizations which are found in the history of all civilized countries indicate that they have been engaged in almost every variety of mercantile, manu- facturing, and industrial pursuits. CO-OPERATIVE STORES. One of the oldest and most familiar forms of co- operation is seen in the establishment of societies for the purpose of distributing articles of daily con- sumption among their members. A store is estab- lished under a manager and assistants, goods of the best quality are purchased on favorable terms, and retailed to members at such small advance on cost price as is sufficient merely to pay expenses and leave a small profit. All sales are for cash. Soundness in the articles bought and comparative cheapness alone are aimed at. There is little trouble in book- keeping no loss from giving credit. The customers are their own store-keepers, and share equitably in the advantages and profits of the business. Under proper management, and by holding to the ready- money system, such results have been attained as to make these co-operative stores of the highest value to their subscribers. jtZZ'^* TUP! i8 MANUAL FOR CO-OPERATION ABROAD. England, more than any other nation, has been the home of co-operation in its varied forms, and the whole subject has had an amount of attention in that country which is, as yet, unknown here. There has been elaborate, though not scientific and philosoph- ical, legislation upon the subject. Many able writers and statesmen have given it their attention. There is a large amount of literature connected with it, in- cluding a number of valuable periodical publications. The English co-operative societies are of great variety. There are many co-operative stores, supply- ing goods for members at but a nominal advance over first cost. Some societies engage in the wholesale trade, making a specialty of furnishing goods to the co-operative retail stores. Others import foreign goods and purchase vast quantities of domestic pro- duce and manufactures. Some are engaged in manu- facturing, and have built and are successfully operating large cotton factories, flour mills, and other such establishments, which compete in the general field of manufacturing enterprise. Some are engaged in banking and similar financial operations. In all these societies the operators, or employes, receive regular wages and also dividends on the profits. The annual statistics show that vast sums of money are handled by the societies. In Germany co-operative societies are numerous and many of them have been very successful as mercantile and manufacturing enterprises. Others are engaged -in a variety of undertakings, as raining, laundrying, real-estate transactions, etc. But those which are best known are the Sparkasse, or "People's BUILDING ASSOCIATIONS. 19 Banks." These have been established for more than a century. They are under very rigid governmental supervision. They pay but a small rate of interest on deposits and loan money on first mortgage bonds and other securities. They have proved of the highest value to the German people. IN THE UNITED STATES. In this country there have been many experiments in the way of co-operative effort. The conditions here have been different in many respects from those in the older countries. Moreover, there is a lack of the many years of experience which guides co-opera- tive effort in Great Britain and Germany. Unfavor- able conditions, inexperienced management, and the lack of necessary legal restraints and official super- vision, have brought failure to many of these efforts at co-operation. However, one form of co-operation has been remarkably successful in this country. This is found in the building and loan associations of which it is the purpose of this work to treat. The conditions here have especially favored these societies. In consequence of this the building associations of this country now compare favorably in the number of organizations and members, in the amount of capital they control, and in influence, with the co-operative societies of various kinds so long established in the olcler countries. CHAPTER II. BUILDING AND LOAN ASSOCIATIONS. OBJECTS AND CHARACTERISTICS. The primary or fundamental idea out of which the Building and Loan Association has its rise is that of enabling persons with limited means and small incomes to become the owners of homesteads or real property. It is this idea of purchasing real estate and building homes thereon, that has given to these societies the name by which they are now so generally known. But one who would get his understanding of the practice, work, and nature of a building and loan association from its name only would have very mistaken ideas in regard to the real character of these organizations. The building of houses may be, and generally is, a part of the system of the associations, but it is only an incidental feature of their work. A more significant title for a society of this kind would be "A Saving and Loan Association." The use of the word "Building'' in the name of the associations is traditional, having been handed down from the first co-operative societies of this character which were known as "Building Societies." The Building Association, therefore, while not (20) MANUAL FOR BUILDING ASSOCIATIONS. 21 necessarily a Building Association, is always a Saving Society and a Loan Association. It is a money-saving institution in that a necessary part of its system con- sists in the regular depositing by each of its members of a certain portion of his earnings or income. It is a monty-ma&inf institution in that the funds thus accumulated are so used and applied as to secure for the association a good rate of interest. It is a money- loaning institution in that it undertakes to advance or loan to its members upon acceptable security such amounts of money as, from time to time, their neces- sities demand and their circumstances will allow them . to borrow. It is a popular institution among that class of persons who compose the membership of such associations since it is thoroughly mutual and demo- cratic in its character, each member sharing equitably in all its advantages and privileges, and having an equal voice in its management^ ADVANTAGES OF MEMBERSHIP. Persons become members of associations for a variety of purposes. Some seek in them a safe de- positary for their slowly accumulating funds, thinking them safer when thus deposited than if retained in their own possession. Such persons, moreover, find a strong inducement to become members in the fact that the association provides a safe and convenient method of investing their small means at a good rate of interest. Others use an association as they would a savings bank for the purpose of accumulating a fund to purchase a home, to embark in business, or for some other form of investment. But very many persons become members of associations because of 22 MANUAL FOR the privilege which the}' thereby obtain of anticipat- ing the future and securing the immediate use of money which they will afterwards gradually replace through depositing, from week to week, or month to month, as the case may be, a portion of their regular earnings. Associations will advance to this class of members certain sums of money, the payment of which in installments is secured by the pledge of the stock of the member and the mortgage of some ap- proved real estate, or the depositing of government or other bonds as collateral security. The theory of the Building and Loan Association, therefore, is very simple. Money is collected in com- paratively small sums from large numbers of people, and loaned to others who borrow upon real property or other approved security, either to build homes, or to enter trade, or for any other purpose. With per- sons of the class among whom associations are most popular, the accumulation of means, when the}* work alone, is so slow as to discourage much effort in that direction. A co-operative society in the form of a building and loan association furnishes such persons an opportunity for regular and compulsory saving, and enables them, at the end of a certain period, or in anticipation of it, to purchase and to hold real prop- erty in their own names, or to secure special advan- tages in other directions impossible to them under ordinary circumstances. Originally, members of asso- ciations were permitted to subscribe only fixed sums at stated times. Now, in the best conducted associa- tions at least, every facility is given for varying powers of investment, and to find a place for capital, little or much, and entrance and withdrawal are BUILDING ASSOCIATIONS. 23 equally easy. In various ways the policy and methods of associations have been varied to meet the conven- ience and necessities of members so as to popularize them and to render them more practical in their operations. EARLY HISTORY. Wherever co-operative societies have existed we find some of them more or less devoted to transactions in real estate, and to assisting their members to be- come owners of real property and to erect homes. Some references are found to the existence of a society of this kind in London as early as 1798, but there is no reliable and complete record of its history. Among the first co-operative building societies of which we find an authentic and full account is the Union Building Association founded at Greenwich, England, in January, 1809. The purpose of this organization, as declared in its rules and regulations, was the raising by monthly subscriptions of a fund to be expended in building houses. These houses, as they were built, were deeded to the different members of the association. The membership of this society was restricted to the number of fifty, the whole num- ber of shares was two hundred of a value of > 2l each. Payments were made in monthly installments of two guineas each. A member was subjected to a fine for default of payments and if he continued delinquent the money already paid in was, under cer- tain conditions, forfeited to the society. Every share in this association represented a dwelling-house. The houses were built under the supervision of the ; society's inspector and by certain tradesmen specified 24 MANUAL FOR in its articles. The houses were distributed among the members by lot, a new house being built as often as the, society had sufficient funds. From the time a house was finished, the member owning it paid to the association five per cent, per annum on his share of ,210 until the close of the society, at which time each member should have paid in the full amount of the share held by him. Members who were success- ful in the drawings were compelled to give satis- factory security for the money advanced them for their houses. There were various other rules con- nected with the operation of this early building asso- ciation which are quite interesting but which can not be enumerated here. Another of the earliest building associations of which we have an account was established by the Earl of Selkirk, at Kircudbright, in the south of Scotland, in 1815. The Earl of Selkirk was a gentle- man of large means and philanthropic ideas. He is said to have spent considerable time and study in per- fecting and developing the scheme of this society. The organization of similiar societies gradually ex- tended into the manufacturing districts of England and Wales. Afterwards they were established in London, and soon became general throughout Great Britain. In the year 1836, they had become of such public importance that an act of parliament was passed affording facilities for their formation and pro- viding for their government and management. Since that period they have had a flourishing growth throughout Great Britain. Such t associations have also long been in existence in other countries, particularly in Germany. Owing BUILDING ASSOCIATIONS. 25 to the frugal and associative character of the German people co-operative efforts of this kind have been very popular among them, not only in their native country but where they have settled in communities else- where. Associations in Germany have their own peculiar characteristics and have been remarkably successful and have greatly assisted the material wel- fare of their membership. IN THE UNITED STATES. Published accounts differ as to the first establish- ment of building associations in the United States. Some writers claim for the associations of this country an English origin, and fix the date in 1836, the year in which the English Parliament first adopted an act for the government of the building societies of Great Britain. This is probably an error. Gustav Korner in his book, "Das deutsche Element in den Vereinigten Staaten," (The German Element in the United States), in speaking of some of the influential and public-spirited German citizens of Pennsylvania, (pp. 73 and 74,) says of Dr. William Schmole: "In the year 1846 he returned to Philadel- phia. * * * We have especially to thank him for the establishment of the first building association in Philadelphia, which was organized under the name, "Amerikanischer Darlehen und Bauverein," (The American Deposit and Building Association). He also was the founder of numerous societies of this kind." It seems to be well established that the first association in this country was formed in Philadel- phia, and the passage just quoted, fixes the date in 1846^ x Dr. Schmole, through his brother residing in 26 MANUAL FOR Brooklyn, N. Y., succeeded in organizing in the same year an association in that city under the name, "Brooklyner Gegenseitiger Darlehen und Bauverein," (The Brooklyn Mutual Deposit and Building Associa- tion). In the following year, 1847, through his friend Wolsieffer, Dr. Schmole secured the organization of an association in Baltimore, Md. Similar organizations appeared soon afterwards in New York City, Newark and Hoboken, New Jersey, Boston, Mass., and other cities of the North, and, about 1850, they began to be established in Charles- ton, S. C., Savannah, Ga., and other prominent South- ern cities. Associations have continued to spring up from time to time throughout the country, until of late years they have become numerous in almost every state. It is estimated that there are at the present time nearly 6,500 associations in the United States with a membership of 2,000,000, and an author- ized stock of over $750,000,000, of which $500,000,000 is subscribed, and $250,000,000 paid in. The good results which follow the establishment of associations are well illustrated in the city of Phila- delphia, where the first one was established. Probably one-fourth of the dwelling-houses in that city have been built through the agency of the associations and much of the permanent prosperity of the city's popu- '. ition is doubtless due to their introduction. It is through this agency that the city has attained the proud and significant title of "City of Homes." Over 60,000 workingmen in this one city have secured homes through these associations. The first association in Cincinnati, Ohio, was established July 8, 1868. There are now in Hamilton County 400 associations, of which 325 are within the BUILDING ASSOCIATIONS. 27 corporate limits of Cincinnati. The capital stock of these 400 associations averages $500,000 each, and their weekly income is about $150,000. When it is remembered that the greater portion of the money thus collected each week is used for building pur- poses, then the substantial value of these associations in relation to the general growth and welfare of the city is easily recognized. It is highly probable that, were it not for the provision which is made through the associations for the regular laying aside, by the payment of the dues, of a specified portion of the weekly earnings of the members, the money thus saved would be spent for articles of ephemeral or doubtful value, and thus would be in the nature of a permanent loss. In Dayton, Ohio, is one of the most properous associations in existence, called "The Mutual Home and Savings Association." It was organized in 1871. Its volume of business is so great that it has been found necessary to establish a general office and to keep it open during all the business hours of every working-day in the week, and to employ a corps of clerks. From Ohio, associations spread jnto Kentucky, Indiana, Illinois, and other states. In one or two states building associations have proved failures and their formation has been either prohibited or abandoned. This is perhaps owing to improper legislation and methods. But in most of the cities and states where they have been established they have continued to prosper and multiply until their number, and the amount of capital and property under their control, have grown enormously, as is seen from the few illustrations given above. 28 MANUAL FOR BENEFITS AND INFLUENCES. Building and loan associations are now recognized generally as an important factor in the social economy of the country. Their establishment is encouraged by political economists and philanthropists, and they are guarded and fostered carefully by legislation. The large middle class of our population, among whom they principally flourish, recognize them as a means to financial advancement. Their beneficial and economic value in a community is recognized by all classes and hence they are encouraged on every hand as a potent factor in promoting the public welfare. Briefly summarized, some of the chief advantages of the associations may be stated as follows : 1. The character of an association is such that each member has an equal voice in its creation and management, and shares equitably in its advantages and profits. 2. A co-operative enterprise of this character fur- nishes the best method by which workingmen, and others with limited incomes, can become their own capitalists, thus rendering this class, in a measure at least, independent of other capitalists. 3. An association furnishes a better and safer opportunity than any other plan that has yet been devised for securing a liberal return of profits from mall and periodical savings. 4. By means of associations the industrial classes are instructed in the management of money and property. 5. But the particularly striking feature of these associations lies in the fact, that they enable their members to secure the benefit of their earnings in BUILDING ASSOCIATIONS. 29 advance by loaning to the members funds with which to build homes or to embark in other enterprises, which loans they repay in such regular weekly or monthly installments as their earnings will allow. With the spread of intelligence under our modern civilization there has been an ever-increasing effort on the part of the working-classes to accumulate money. In order to become in any measure in- dependent, a man, dependent upon his own earnings for his income, must constantly practice industry and frugality with intelligent judgment and patient per- severance. Out of the many schemes and systems that have been devised to aid workingmen in this effort, none have proved so popular and successful as building and loan associations. A strong point in their favor is in their purely democratic character and the mutual nature of their benefits. In other systems of saving, the management of the enterprise is vested in a few individuals and the depositors have little more to do with it than the mere mechanical act of making their deposits at the regular periods. In the building association the conditions are entirely different, for here the depositor is also an active manager and partner in the enterprise. He has his . voice and his influence in its entire management and direction. There is no separate, preferred class to be benefited at the expense of the other members. Even though a capitalist becomes a member and subscribes for a large number of shares he can derive no benefit or advantage on each share that can not be com- manded by the humblest member. He must enter upon the same terms exactly that are required of other members and must stand upon an equal footing 30 MANUAL FOR with them throughout. The stockholders elect their own officers, choosing from their own number such persons as they wish to clothe with authority to ad- minister the affairs of the association. By using dis- cretion in the selection of intelligent and honest managers, and then holding them to strict account- ability for their policy and management, they insure an economical and faithful administration of the busi- ness of the association, in the benefits of which all the members participate. An association opens to a member an opportunity for profit on his small savings which he can not secure in any other direction. The deposits of all the members, when combined together, form a sum of money of such proportions that it commands oppor- tunities and advantages in the way of investment im- possible for the members, acting independently, to vSecure for their individual savings. Under this \ system, workingmen become their own self-made / capitalists. The combined savings of those working- men who do not need their money form a sum out of which other workingmen who do need money may supply their wants, and on such conditions that both borrowers and lenders reap a mutual benefit from the transaction. They are thus independent of private capitalists and save for themselves the tribute they must otherwise pay to some money-lender, should they desire to build themselves a home, to embark in business, or to make any other use of money. More- over, as is seen, the association itself creates the op- portunity for the profitable use of capital. The workingman, trained to habits of economy and thrift by the influence of the association, and roused to a BUILDING ASSOCIATIONS. 31 laudable ambition by the opportunities which it sug- gests and offers, becomes himself a borrower and in- vestor of capital, and supplies his needs for money from the accumulated capital of his fellows. The plan upon which associations are operated insures the minimum of expense in handling their funds. At the same time the opportunities and sources of profit are unusual and can not be secured to the .same extent except through a co-operative effort of this character. Not only is a good rate of interest to be expected from an investment in the shares of a well-conducted association, but, through the system adopted by nearly all these societies, the members receive compound interest on their deposits. The fines and forfeitures enforced against delinquent members constitute another source of profit for mem- bers prompt in their payments. The premiums on loans, and the undeclared dividends on withdrawals, are additional sources of profit. The amounts real- ized from these sources from time to time, like the dues, begin at once to draw compound interest. It is seen therefore that the building association furnishes unusual opportunities to the workingman for secur- ing profits upon his small savings, opportunities indeed which, as has been shown, capitalists them- selves can not secure, except upon exactly the same terms and conditions. Ordinarily a man earning small wages, and espec- ially one having a considerable family dependent upon him, finds great difficulty in meeting the con- stant demands made upon his purse. Too often, dis- couraged by his circumstances, he falls into a mere routine way of living, satisfied if, from week to week, 32 MANUAL FOR his income meets his expenses. Occasionally, how- ever, a man of this class, more ambitious than his fellows, sets about some plan of his own for regular saving, and thereby gradually accumulates a sum of money. Whether he does this by hoarding it in some secret receptacle of his own, or by depositing it in some bank or savings institution, the act is only a routine, mechanical one and he gains thereby nothing more than a mere addition to his savings. In saving by this plan, a workingman not only loses the oppor- tunity of .securing interest or profit upon his savings, but he has no occasion for the exercise of his judg- ment, and gains no knowledge or experience that would be of advantage to him in the management of a sum of money if he had it. Living thus from day to day in ignorance of the various means of accumulation and investment he is not likely to make much advance in this direction. But should he succeed through constant hoarding in accumulating finally a sum of money of his own, when he undertakes to make an investment he must either run great risk of losing a portion or all of his savings through his ignorance and inexperience, or he must become dependent upon the skill and knowledge of others in the management of his property. This lays a constant tax upon him which serves to cut down his profits to some extent. It is not necessary to dwell upon the advantages gained by workingmen who are able to secure homes of their own. These advantages are seen in the increased happiness and contentment of families, their greater comfort and better health, increased educational advantages and opportunities, better economy in the general expenses of living, and that BUILDING ASSOCIATIONS. 33 independence of action and bearing which can arise only from the intelligent and regular discharge of the responsibilities and duties incident to this natural and beneficial form of home life. PROBABLE FUTURE. The rapidity with which building associations have multiplied is remarkable, and the number already in existence is extraordinary. In many communities they are even now competing successfully with the banks in the amount of capital they control. Wher- ever they exist, as a rule, a large proportion of the popu- lation is identified with them both as stockholders and borrowers. The benefits of such organizations are so apparent and their popularity is so well established that it is evident that they are but beginning to occupy their fields of usefulness. In view of the steady and rapidly increasing development of the country it seems entirely safe to predict that building associa- tions will increase in their number and importance to stupendous proportions in the near future. The growth of monopolies, and the tendency of money to centralization, the organization of syndicates and " trusts" which create false values for real estate and many of the necessaries and luxuries of life, will inevitably, more and more, draw the masses of popu- lation into co-operative organizations for purposes of self-defense and financial security and advancement. The wise legislation which is gradually taking shape in the different states will do much to increase the popularity of associations. The almost limitless adaptability of the building and loan association system to the needs of crowded and growing popula- 34 MANUAL FOR BUILDING ASSOCIATIONS. tions is only beginning to be fully appreciated in late years. Every decade witnesses the introduction of improvements into the system. Certainly the future is bright with promise. CHAPTER III. FORMS OF ASSOCIATIONS. THE TERMINATING PLAN. The building association, since its introduction into the United States fifty years ago, has appeared in three distinct forms. The first associations were on the terminating plan. These were useful. They have now largely disappeared, having given way to more popular forms, though a few are still in existence. In a terminating association all the stock is issued as of one date. Such an association is organized on the presumption that all the stock will be subscribed at the opening meetings. This, however, is seldom done. The consequence is that shares sold after the first meetings must be sold at such prices as to make them equal in value to those already issued. To do this a sum must be charged equal to the amount already paid in in installments by the subscriber to the original shares. If the regular dues on shares should be one dollar per week, a person subscribing for a share after the association has been running ten weeks, must pay ten dollars for the share. In like manner, if the association hafe been running for a (35) 3 6 MANUAL FOR longer period he must pay an additional dollar for each additional week. Moreover, if he does not sub- scribe until after profits have been declared, he must pay such additional amount on his shares as will cor- respond to the earnings of the original shares up to that time. The same rule holds through the entire existence of the association, each year making it more difficult to enter. After an association organized on this plan has run for a time, it is impossible for many persons who would gladly become members to raise a sufficient sum of money to pay up the back install- ments, the initiation fees, the accrued profits, and other incidental expenses. In its practical workings therefore, an association organized on this plan is not well adapted to meet the conditions of that particular class of persons who most need such an organization and are most likely to be benefited by it. In a terminating association all the shares are, of course, at all times of equal value. Whenever the total amount of dues paid in and of accumulated profits equals the par value of all the shares, the as- sociation terminates, and its affairs must be wound up. Bach stockholder who has not borrowed his money in advance, receives the full value of his shares. To those who have secured their money in advance, their mortgages, cancelled and receipted in full, are returned. THE SERIAL PLAN. The second form of association is the serial. It is a development of the terminating. By some this is called the "Philadelphia" or "Pennsylvania" plan. In this form the stoder { is issued in series, as first BUILDING ASSOCIATIONS. 37 series, second series, and so on. The association usually is chartered for a certain number of years, and with a specified amount of stock. Instead of selling all the stock as of the same date it is divided into series, one series being sold as of the date of the beginning of the first term, the second series as of the date of the beginning of the second term, and so on, until all the shares are sold. The serial issue may be monthly, quarterly, semi-annually, annually, or otherwise, according to what may be fixed as the length of the term. At the end of the first term the assets of the association are divided by the total number of shares in the first series, and the value of these shares at this time is thus ascertained. The second series is then issued and rated at par value. The shares of this second issue run in the same manner as those of the first. At the end of the second term the sum total of the income of the term is divided by the total number of shares in both series, and the equitable withdrawal value of shares in each series is ascertained. Then the third series is issued, and so on to the end. It will be seen that under this plan the older the series the greater the value of the shares. In some serial associations members may join one of the older classes by paying in what would be the total amount of dues and a proportionate share of the profits, that is, the full withdrawal value of the shares at the time of payment. Sometimes, also, on the issue of a new series, old shares are withdrawn and their value taken up in the shares of the new series. Usually, after an existence of from eight to ten years, the first series reaches its ultimate value, that 38 MANUAL FOR is to say, it matures. The members holding these shares then receive their full value in cash, and borrowing members, whose mortgages become released with the maturing of the series, receive their mort- gages cancelled. The association now has reached the period when each series of shares must be paid up as it matures. If it is running successfully it secures an extension of its charter. It then continues issuing new series of stock at the beginning of each term. If its full amount of stock has been subscribed each new series now takes the place of the old series that has matured, so that the total number of shares thenceforth continues the same. This plan may be compared to a piece of ma- chinery which consists, say, of ten cog-wheels, which operate one grand revolving wheel. These ten smaller wheels are numbered from one to ten and are inserted one after another in their regular order. When number one has been running ten years it is worn out, whereas, number two has been running but nine years and has one more year to run, number three has been running eight years and has two years to run, and so on. When number one wears out at the end of ten years a new number one is inserted in its place which will run ten years. At the end of the next year a new number two is inserted, and so on, perpetually. And thus the old machine is kept con- stantly in repair and in perfect operating form. It will be seen that the serial association is a great improvement over the old terminating plan, inasmuch as it is much more practicable and adaptable in its operations to the demands likely to be made upon it. It provides for the constant introduction of new mem- BUILDING ASSOCIATIONS. 39 bers and new money, and has in it the elements of permanency and perpetual operation. This plan originated in the city of Philadelphia, where building associations have had their greatest demonstration of practical usefulness. From Phila- delphia it spread abroad until it became the prevailing form of association throughout the country. The serial associations are more numerous at present than any other form. THE PERPETUAL OR PERMANENT PLAN. As the building association became better under- stood and more popular a demand arose for some form of association more pliable and adaptable than either the terminating or the serial form. A new modification then appeared which has been styled the perpetual plan. This had its origin in Cincinnati and Ohio, where it has been very successful and popular, so much so that it has spread through other states. Under this plan associations are granted perpetual charters, the amount of their capital stock being fixed at a certain sum. They are allowed to begin operations as soon as a certain portion of the stock is subscribed. After the association is in operation new members are allowed to enter at any time on an equality with the original subscribers, the stock of each member dating from the time of his entry. Thus the business of the association runs along from year to year until finally all the stock is subscribed, when an additional amount of capital stock may be added. After a time the shares first issued begin to reach their full value. As they thus mature their owners draw out their money if they 40 MANUAL FOR have not borrowed it in advance and their "shares are cancelled and their membership ceases. If they have borrowed their money in advance their mort- gages are returned to them, receipted in full. If a member, whose stock has thus matured, has not borrowed his money in advance, and does not wish to draw it out, a certificate of -paid-up stock is issued to him, and he leaves his money in the association as a matter of investment. Under this plan members have the same privileges of withdrawal as of entry. They may withdraw at any time by complying with the rules of the associa- tion, receiving their equitable share of the assets. Experience has shown that it is possible so to work out the plans for the calculation of dividends, pre- miums, interest, etc., and so to arrange all the other details of the operations of an association, as to be able to treat each share equitably upon its own merits, without in any way interfering with the interests of any other share. This form of association is a still farther develop- ment of the original plan. It adapts the operations of such a co-operative society to the actual necessities and the possible emergencies of such persons as need its benefits. In a sense the introduction of this plan marked the beginning of a much more general popu- larity of associations. Since its introduction they have begun to spring up in large numbers in all sections. It seems likely 'that this will become the general form which building and loan associations will eventually adopt. Nevertheless many and marked improvements are still to be expected. BUILDING ASSOCIATIONS. 41 THE "NATIONAL" PLAN. The building association has been recognized as one of the most useful institutions for the welfare of society and the best development of the country, To such an extent is this true, that both in the United States and in other countries special immunities and privileges have been conferred upon such societies by legislative enactment. The restrictions of the usury laws have been removed in their favor, and various other privileges have been accorded them, in order to promote their usefulness. Under such legislative fostering they have reached their remarkable popu- larity and prosperity. Out of their success itself has sprung up a danger which is seriously threatening not only their con- tinued usefulness, but their very existence. A build- ing association is, in its very nature a mutual, co- operative, democratic society, the affairs of which are managed by its own members for their own mutual interests. It is a money-saving institution, and is not, and in no speculative sense can be, a money- making institution for some of its members at the expense of others. It deals only with members. All that comes into it comes from members, and all that goes out of it goes to members. There are no out- side "producers," and there are no outside "bene- ficiaries." This being the nature of these societies it is apparent that they must be local in their organ- ization and operations. This is essential in order that the members may have a personal knowledge of one another, and also that all the members may have a personal knowledge of all the affairs of the associa- tion, and may participate in their management. 42 MANUAL FOR Taking advantage of the popularity of the local or genuine building and loan association, certain finan- ciers (?) have sought to utilize the popular confidence in this form of co-operation for their own benefit. They have instituted what they have called "National" building and loan associations. They represent that their institutions are a development of the regular local building society into national proportions, with a corresponding increase of privileges and advantages. The sophistry of their arguments is about on this wise : If a local association, operating in a single com- munity in one state, pays a profit of four per cent., will not a "National" association, operating in say twenty states, be able to increase this profit in propor- tion to its field of operations ? We put this in this extreme form in order to emphasize its manifest ab- surdity. In the nature of things these so-called "National" associations must be ephemeral. They cannot last long for they have no real foundation. Moreover, what has been probably the most damaging to their existence, is the fact that a number have been con- ducted by unscrupulous people, after unscrupulous methods, for unscrupulous purposes. Nevertheless, at the present, they threaten very imminent danger to building association interests, and it is worth while to give them some attention in a publication of this character. I/ocal building societies have existed in England for nearly three-quarters of a century. There are now nearly 3000 such societies in Great Britain, with annual receipts of over $150,000,000. In the United States there are at present, according to BUILDING ASSOCIATIONS. 43 the best estimates, over 6500 building associations, with a membership of nearly 2,000,000, and estimated annual deposits of over $100,000,000. These figures show to what stupendous proportions these co-opera- tive home-building societies Rave grown. They have proved the most successful economical institutions of the world's history. So conservative and careful has been their management that less than one-tenth of one per cent, will fully cover the entire losses in these institutions during the past decade. Now, what object can any set of men have in attacking directly or indirectly, openly or insidiously, an institution with such a record as this, unless it be some selfish and unscrupulous one. They would steal the popular name of building association to cloak their own nefarious purposes, and thus disguising them seek to transfer the public confidence in this institution to their own unworthy enterprises. They may say, they do say, that they have no attacks to make upon ''local" building associations. The very fact that they would attempt to make a classification of associations is an attack upon the genuine institu- tion. A building association can not, in its nature, be anything but a local institution. When they represent that their institution is of a national char- acter, and in consequence is better and more desirable than the local society, what can this be but an attack upon the local form of co-operation ? And since the local feature is an absolutely essential element of a building association, any discrimination against, or attack upon, this feature of an association is a dis- crimination against and an attack upon the associa- tion itself. 44 MANUAL FOR BUILDING ASSOCIATIONS. We would not hold, we do not hold, that there is not and can not be any form of national industrial, commercial, or financial co-operation. What we do maintain is that in the very nature of the institution itself there cannot be such a thing as a "National" building association. These points will hold against the so-called "National" building and loan associa- tions : 1. They are not mutual in their character, for some members profit at the expense of others, and out of proportion to their individual holdings. 2. They are not democratic or mutual in their management, from the fact that the officers perpetuate themselves in office, and fix their own remuneration, and the stockholders are not advised of the trans- actions of the concern, and do not and can not partici- pate in its management. 3. They are not economical and conservative in their management from the fact that their expenses consume a very large percentage of their receipts ; they are not open in their character, for their business is conducted secretly and not reported in detail to their members or to the public. CHAPTER IV. BUILDING ASSOCIATION LEAGUES. NECESSITY FOR CO-OPERATION. The necessity for greater uniformity in the methods of associations has led to various attempts to secure some plan for more concurrent and harmoni- ous action among them. The most promising and successful attempts in this direction are seen in efforts to establish leagues, in which representatives of asso- ciations can meet for consultation and exchange of views, and the perfecting of the best plans of opera- tion for associations. In the older countries, where co-operative societies have been long in existence, co-operation among the societies themselves is better established than it yet is in the Unite'd States. But already in this country the necessities growing out of the circumstances have compelled building societies to unite for their own better protection and development. In quite a num- ber of states building association leagues are already in existence, and others are in process of organization. (45) 46 MANUAL FOR How TO FORM A LEAGUE. Inasmuch as the organization of state leagues is a matter claiming a great deal of attention at the present time, and is likely to continue to do so for some time to come, it may be well to give some more or less specific suggestions as to how to organize and conduct a league. It will be necessary for individuals interested in the promotion of building associations to take the initiative. These should confer together by letter, or otherwise, and should agree upon the best man to lead the movement. Then he, with others, should issue a call for a meeting of representatives of associations for the purpose of establishing a state league. Those attending this convention should come formally or informally representing their re- spective associations. It is the better plan that the call for the convention be issued some time previ- ous to the date of its meeting, so that the matter can be brought before the directors of different asso- ciations and they can arrange to send regularly ap- pointed delegates and to pay their expenses. This, of course, would tend to make the meeting larger and more representative. Again, where the attendance is of a purely voluntary character, it may not be the most desirable persons who will attend and take a prominent and influential part in the proceedings. Associations should send to such a meeting their most experienced and best informed members so that their action may be wise and conservative. When the convention meets it should effect a temporary organization by the appointment of a chairman and a secretary and a committee on business. An informal BUILDING ASSOCIATIONS. 47 session should then be held for the presentation of matters and suggestions by the different delegates present which should be referred to the committee on business. The session should then adjourn to give the committee on business an opportunity to arrange a program for the proper consideration and disposi- tion of the subjects presented, and any other matters that may come before the meeting. The proceedings at the further sessions of the convention must be governed by circumstances. As to the final organization of the league two or three things may be said. 1. The organization should be simple. Not a cumbrous but an effective machine is what is re- quired. 2. The constitution and by-laws slvnild be brief and to the point, specific, and at the same time, com- prehensive. They should be drawn with the sole idea of giving practical effectiveness to the organi- zation. WHAT A LEAGUE CAN Do. The work of a league will divide itself into two branches : i. The primary purpose in the organization of a league will be to secure legislation favorable, and to prevent legislation inimical, to the interests of associa- tions. In pursuance of this purpose at the meetings of the league matters for consideration can be sent up from associations in all parts of the state and working under divers circumstances. The league delegates, representing the whole building association interests of the state, can consider these matters, specifically _; OF 48 MANUAL FOR and arrange to have them formulated in the most desirable way. A league being established, it is possible to send a delegation representative of building association interests before the legislature on short notice at any time, whereas, in the absence of such a league, matters of grave importance must go by de- fault, and association interests suffer in consequence, because it is the business of no particular person to represent them before the legislature. 2. A second matter of great importance to asso- ciations is the opportunity which the existence of a league affords for the discussion of all questions con- nected with the practical management of associations. As is well known there is not uniformity of method in disposing of various matters in different associa- tions. In some associations one phase of the business may be handled by a better method than in another. Delegates, coming together for the discussion of these practical questions, may learn much from one another which will be greatly to the advantage of their respec- tive associations. There are many other incidental advantages which may arise from the establishment and the regular meetings of such a league which will readily suggest themselves to any thoughtful person. Such Con- gresses have become a striking feature of co-operative work in England. LEAGUE MEMBERSHIP. Of course the work of a league can not be carried on without some expense. Nevertheless, if a league is properly organized and managed, the expenses need not be heavy. To meet these expenses each associa- BUILDING ASSOCIATIONS. 49 tion which becomes a member of the league should pay a small fee. So far in the history of leagues this fee has usually been fixed at five dollars annually. In case additional funds are necessary it is easy to in- crease the annual dues or to make some other pro- vision for raising them. It is very important that every association should become a member of its state league. A state league is charged with protecting the interests of all the associations in the state. In order that this work may be done intelligently all the associations should be represented in the league in order that their re- spective needs may be properly presented and fully understood. The league, like the associations them- selves, is a mutual and co-operative institution. Asso- ciations, therefore, should identify themselves with it so as to make it co-operative in fact as well as in name. Again, since the league protects the interests of every association in the state, each association should bear its proper share of the expenses and labor connected with the work of the league. It is not fair where there are, say, three hundred or four hundred associations in a state, for twenty or thirty of them to bear the full expense and labor of looking after legislation, perfecting methods, and- so on. It ought to be borne in mind also that while a league is an organized body its work must be done by individuals. While the expenses of delegates to the league meetings are usually borne by the associations they represent, yet these individual delegates must lose their time from their own private business, and incidentally are put to no little inconvenience and oft- times expense. Their work if well done is laborious 50 MANUAL FOR BUILDING ASSOCIATIONS. and painstaking. These things are especially true of the officers of leagues. Under these circumstances they should certainly have the cordial and unanimous support of the whole interest which they represent, thus, in a measure, lightening their burdens and giv- ing them such a standing and prestige as will make them far more influential in securing the ends for which they labor. A NATIONAL LEAGUE. Sooner or later a national league will be organ* ized to represent the entire building association in- terests of the country. Through the system of co- operation among associations thus brought about correct statistical and other information will be collected and disseminated, methods of organizing and managing will be perfected and simplified, greater economy and security will be secured, legislation will be improved and made more uniform, and the in- terests of associations and their members greatly enhanced. The advantages and necessities of such a method of co-operation are so evident, and the cost would be so slight, that it would seem to be only a matter of a short time until it will be established. CHAPTER V. LEGISLATION. ITS NECESSITY. The necessity for judicious legislation for the con- trol of building associations is apparent. Immense interests to citizens and the state are involved. If the associations are of value at all, they are closely identi- fied with the material and moral welfare of communi- ties. It is of the highest importance therefore that their corporate rights and duties should be clearly denned by statute, and that the individual rights of members should be carefully guarded, and their duties and privileges specifically defined. The rapidity with which associations have multi- plied, and the immense aggregate which the business they transact has reached, have caused them more and more to attract the attention of the various state legis- latures. The many different people that are chosen to these bodies, representing so many different sec- tions and varied interests, with many ideas and diverse views, and not a few of them with no knowledge of or experience in building associations, establish condi- tions out of which have sprung up legislation, some of which is wise, and some of which is otherwise. 52 MANUAL FOR Many conservative and useful laws have been enacted which have materially promoted the interests of the country. On the other hand there has been no little patch-work and superficial legislation which some- times has proved detrimental to the cause it was intended to benefit. The very fact of the growing popularity of associations has made many of our statesmen a little too ambitious to legislate for their interests, which has resulted in the introduction and adoption of various impracticable and unwise meas- ures. But the time has arrived when, through expe- rience, the people generally are becoming better informed as to the real nature and functions of associations. The light of the press is also turned upon the subject. The establishment of state leagues has made it possible to reach legislators in a formal, representative, and influential manner. Legislators are wiser than formerly. If an improper measure is now introduced into any legislature there are faithful and intelligent guardians of the interests of the asso- ciations, either within the legislature or without, who will quickly turn the light upon it and expose it. What is most needed in some states, perhaps, is not more legislation, but less, and- of a better and more practical character. Uniformity is also some- thing to be greatly desired, that is to say, such uni- formity as is possible and proper according to the varied circumstances in the different states and com- munities. STATISTICS. One of the most promising features of the building association movement is seen in the fact of the con- tinued inquiry for statistics giving reliable informa- BUILDING ASSOCIATIONS. 53 tion. This inquiry for specific knowledge of this character has already induced a number of the states to arrange for the collection and publication of full statistics and information in reference to associations. Among the states to lead off in this work were Massa- chusetts, New Jersey, New York, Illinois, Indiana, Nebraska, Kansas, Maine, Ohio, and other states. It should not be long until all the states have bureaus of building association statistics. It is very probable and desirable that a national bureau of this character be established at an early day. IN ENGLAND. The success of the Greenwich Union Building v Society, and of other early organizations of the kind in England, soon attracted the attention of the govern- ment. So important was the movement indicated by these organizations considered, that in the year 1836, an act of parliament was passed giving building associations legal recognition, providing ample oppor- tunities and inducements for their formation, and making full provision for the protection of their mem- bers. English societies operated under this act until 1874, when a new act, very liberal and elaborate in its provisions, was passed. PROVISIONS OF THE ENGLISH LAW. The English law seems to have been the basis upon which most of the legislation in this country relating to building associations is founded. A brief synopsis of its provisions will therefore be of interest. It declares that any number of persons may establish a society, either terminating or permanent, for the 54 MANUAL FOR purpose of raising, by the subscriptions of the mem- bers in stock or funds, means for making advances to members out of the funds of the society upon security on freehold, copyhold, or leasehold estate by way of mortgage ; and any society under the act shall, as far as it is necessary for the said purpose, have power to hold land, with right of foreclosure, and may from time to time raise funds by the issue of shares of one or more denominations, paid either by periodical or other subscriptions, and with or without accumulating interest, and may repay such funds, when no longer required for the purpose of the society. Societies are empowered to receive deposits or loans from members or other persons, corporate bodies, joint- stock companies, or terminating building societies. Societies established under or adopting the act of 1874 are bodies corporate, having perpetual succession and a common seal, thus dispensing with the cum- brous and inconvenient system of trusteeship. The rules must specify the society's name and place of meeting, terms of withdrawal and repayment, manner of alteration of rules, the appointment, remuneration, and removal of officers, provisions as to general and special meetings, and the seUlement of disputes, custody of seal, mortgage deeds and securities, powers of directors and other officers, fines, and modes of dissolution. Societies may unite with others. One society may transfer its engagements to another. They may purchase, build, or hire, or take on lease, any building for conducting their business. Minors may be members, but can not vote or hold office during non-age. Accounts are to be furnished to members annually. The societies are exempt from BUILDING ASSOCIATIONS. 5 5 stamp duties, except those upon mortgages. Receipts indorsed upon mortgages are sufficient discharges without conveyance. The law of 1836 provided for the appointment of a special board of commissioners to superintend the work of the Loan Fund Societies of Ireland. This was called the L,oan Fund Board. All societies had to register with and report to this board, whose duty it was to see that the societies conducted their affairs according to the provisions of the new law. DEFECTS IN THE ENGLISH LAW. Upon analysis it will be found that the English acts governing building societies are not philosophical and harmonious in their construction. They were rather spontaneous and sporadic in their origin, springing up from time to time out of necessity, or to meet some special interest. It would not be in place here to attempt an analysis of the English statutes, and to point out their contradictory and inharmonious provisions. It will be sufficient to quote a passage from the masterly work* of an English writer, Mr. Henry F. A. Davis. He says: "This (act) has been unfavorably noticed by some learned judge who has had to decide a question arising under it. A piece of legislation more resembling patch-work it would be difficult to find anywhere. Two acts of parliament, originally intended to regulate associations having very different objects in view from those contemplated by building societies, and having, as a writer in the * The Law of Building and Free Hold Land Societies, sd edition, H. Sweet & Sons, London, England. 56 MANUAL FOR Jurist once observed, internal evidence of their having been passed during the chaos of a legislative convul- sion, badly conceived and badly executed, were by a third act, if possible, more clumsy than either, incorporated so as to form the code which was to govern building societies." IN THE UNITED STATES. The history of associations in the United States is yet recent. The associations, which appeared slowly at first, and, later, more rapidly, were organized, partly as unincorporated, voluntary associations, and partly under charters obtained under the general acts of several of the states authorizing the incorporation of beneficial and other such associations. The rapid development of the country led to a like rapid develop- ment of building associations, so that legislation soon became imperative. During the years from 1850 to 1860 most of the older states endeavored by legislation to regulate the formation, powers, and management of building associations. Since 1860 the newer states have taken up the subject. At the present time, in nearly all the states and territories there is some statutory provision for the government of associations. Building associations are, as a rule, recognized by the different states as a class of corporations distin- guished from every other, peculiar alike in their privi- leges and disabilities. Some of the early legislation connected therewith may be classed as hasty, having been adopted by legislators ignorant and inexperienced in the subject, and with no commensurate precedents for their guidance. But of late years the subject has received more intelligent attention, and many legisla- tors have given much study to the various problems BUILDING ASSOCIATIONS. 57 connected with it. As a result legislation is gradually assuming better form in the different states. But it must be confessed that there is still room for improvement. It does not seem likely that building association laws will ever reach that degree of sim- plicity, perfection, and uniformity, which their great importance demands for them until some system of general co-operation among the many people inter- ested in them in all the states and territories is estab- lished. This will hardly be brought about until the system of leagues, suggested in another place, is accomplished. LITIGATION. Not only has the legislation, under which associa- tions have operated, been imperfect, but the asso- ciations themselves have, not infrequently, been organized by persons both inexperienced and unin- formed in such matters. It has happened, therefore, that, through crude legislation on the one hand, and crude organization on the other, many associations have failed to a greater or less extent in fulfilling their purpose, and that, in most of the states, litiga- tion has arisen in consequence. It would be foreign to the character and purpose of this work, to undertake to give digests of the laws of the different states and territories in reference to associations, or to give an account of the cases arising under these laws, and of the decisions that have been rendered in the different courts. Such matter belongs in a work of a legal rather than of a popular character. Members of associations should look to their regular legal advisers for information and instruction upon all mooted or doubtful questions of a legal character. CHAPTER VI. HOW TO O OW TO URGANIZE. NECESSARY CONDITIONS. In seeking to establish a building association, it is necessary to bear in mind the conditions, which have already been stated, which are essential to make such a co-operative undertaking successful. There must be a community of wage-earners, or of persons with small incomes, and the element of permanency in the local enterprises from which the incomes of the com- munity are derived. This element of permanency is usually found in the extensive manufacture of staple articles, in the sale of the same in populous districts, in market-gardening and other forms of agricultural pursuits, in mining, and in numerous other industrial occupations. Building associations have so multiplied in some communities that there is already competition among them. Where numerous associations already exist of course the question must be carefully considered as to whether there is a real demand for another. Associations are sometimes brought into existence, not so much from the actual wants of the people who are induced to -become members, as in response to the (58) MANUAL FOR BUILDING ASSOCIATIONS. 59 efforts of some individual or individuals who have their own private ends in view. Some person engaged in trade of some character may desire to organize an association and have it meet at his place of business or in his vicinity so as to draw in custom for him. Some attorney may take an active part in the organi- zation of an association in order to increase his client- age. Some one interested in a real estate transaction may organize an association in order to find a market for his lands. These motives are all well enough in their way, provided there is back of them a real need for an association on the part of the people them- selves who are to compose it. As matters now are in some communities it would seem far more proper to consider the question of con- solidation, and the reduction rather than the increase of the number of associations. PRELIMINARY STEPS. Great importance attaches to the first steps taken toward the organization of an association. Unless a good foundation is laid in the beginning the enter- prise will most likely prove a failure. Great care must be taken to have only trustworthy men con- nected with the initial, as well as all subsequent, proceedings. When the proper persons have been interested in the movement it is well for them to attach their names to an agreement to share equally in the liability for the preliminary expenses, such as advertising, rent of place of meeting, blanks, books, etc. A public meet- ing of those interested should then be called in some convenient and respectable place. At this meeting 60 MANUAL FOR temporary officers should be chosen. These consist usually of a chairman, a secretary, a treasurer, and an attorney. These should be persons of some influ- ence in the community, and should have had some experience in conducting public meetings. Some one should be present at such meeting who is prepared to make a clear explanation of the purposes and work- ings of a building association. After this explanation is made the subject should be thrown open for general discussion under the usual parliamentary rules. It may not be possible at the first meeting to determine finally in reference to the advisability of attempting to organize an association. The meeting may decide to appoint solicitors to make a preliminary canvass, so as to discover the probability of securing a sufficient number of subscribers to justify the attempt. For this or other satisfactory reasons it may be necessary to hold a number of preliminary meet- ings before attempting a permanent organization. It will not be out of place to drop the caution that much care should be exercised to keep the prelim- inary expenses as low as possible. Services rendered by individuals should generally be gratuitous, and the expenses for necessary supplies may be made merely nominal. CHOICE OF NAME. When it shall have been decided finally to proceed with the organization, the first thing to be done is to choose a name. In making this choice the following matters must be borne in mind : (i) That the name must, in its form, correspond to the requirements of the statute under which the association is to organ- BUILDING ASSOCIATIONS. 61 ize ; (2) It must not be identical with, or bear a close and misleading resemblance to, the name of some other similar organization in the place where organ- ized; (3) It must not be of such general descriptive character that the association can not by using it acquire exclusive rights in it ; (4) The name must not be improperly or prejudicially assumed, and must not be misleading in its form or character. CAPITAL STOCK. It will be necessary also at an early stage in the proceedings to determine upon the amount of capital stock of the proposed association and the number and value of shares. This is necessary in order that the subject may be canvassed intelligently in the commu- nity. The number and amount of shares should be determined by the local circumstances. In larger cities the capital stock of associations varies from $200,000 to $5,000,000. Shares range from $100 to $500 each. The regular dues or stock payments are generally 25 cents, 50 cents, or $1.00. In the smaller towns the capital stock of associations varies from $50,000 to $1,000,000, shares being from $100 to $500 each, payable in weekly or monthly installments. The number of shares which one member may hold should be restricted within reasonable limits so that the association can not be controlled by a few large shareholders. This is especially necessary when stock- holders are allowed as many votes as they have shares of stock. In some states the laws provide that no stockholder may vote more than a certain number of shares, twenty for instance, though he may own as many as he desires. 62 MANUAL FOR The name of an association and the amount and value of stock are of course finally recorded in the constitution and articles of incorporation. The whole subject of Capital Stock, which is of great importance, is fully discussed in its appropriate place in another part of this work.* THE CONSTITUTION. The most important matter connected with the organization of an association is the framing of the rules or articles under which it is to operate. This task should be placed in the most competent and experienced hands, and their work should be carefully scrutinized before adoption. That part of the rules, which is to become the organic law of the association, the constitution, in its essential features at least, in some states must pass under the inspection and approval of the incorporating authorities, and in fact form part of the articles of incorporation. .As the constitution becomes the fundamental law, it should be framed with a view to permanency, allowing only the most imperative necessity, and, as nearly as possi- ble unanimity, to change it. For this reason its provi- sions should be well understood and be clad in plain language, devoid of clouded and doubtful phrasing. All minor regulations should be omitted therefrom and be reserved for the by-laws and rules of business. Not only should the constitution have the utmost care and forethought on the part of those drafting and adopting it, but it should, if possible, be based upon some model which has stood the test of experi- *) See Chapter VII. BUILDING ASSOCIATIONS. 63 ence. It is found that much the larger part of the litigation that has arisen in the different states in connection with building association affairs, is owing to the careless and crude manner in which constitu- tions and rules are framed. Courts have complained much about the negligence displayed in the wording of these important documents. It is not uncommon indeed to find contradictory provisions in the same constitution relating to important matters. BY-LAWS. After the constitution has been adopted, a set of by-laws should be prepared for the internal govern- ment of the association in accordance with the consti- tution and with generally accepted parliamentary usage. Many associations make the mistake of in- cluding all their rules in the constitution. The by- laws are not of an organic character but simply express an agreement among the members as to how the different parts of the work of the association should be carried on. They should therefore be kept separate from the constitution so that they may be changed and modified from time to time as may suit the convenience or necessities of the association and its officers and members. The by-laws must conform to the constitution of the association and to the general principles of common justice and equity and must be reasonable in their requirements. A by-law is presumed to be enacted by the common consent of all the members of the association. If therefore a by-law shall be enacted that infringes upon the common rights, or the rights established by contract, of any member it is void. In like manner, if a by-law is repealed and 64 MANUAL FOR thus injustice is done to any member whose rights were before protected by the by-law, such action is void. The enactment of new by-laws can not add additional requirements to contracts in existence before their enactment. By-laws must not be enacted which, from their nature, can not be enforced, or which are evidently of a "vexatious, nugatory, and oppressive" character. Nor can a by-law be enacted which has the effect of restricting any member from legal rights and remedies.* INCORPORATION. The different states have different methods of pro- viding for the incorporation of stock companies for business and beneficial purposes. A number of the states have, in addition to this, made special provision for the incorporation of building associations, treating them as a special class of corporations with special powers and disabilities. After the constitution has been adopted or, sometimes even before this has been done, articles of incorporation should be prepared and forwarded to the proper authorities for acceptance and record. Much care should be taken to secure, as incorporators, the best and most influential persons available. A certain amount of stock must be sub- scribed, usually ten per cent., before the association can be incorporated. There are different methods of incorporation in the different states. They are known as incorpora- tion by voluntary association, by special act of the legislature, by decree of court, and by letters patent from the executive. The drafting and securing of *) In the Appendix will be found form for Constitution and By-I,aws. BUILDING ASSOCIATIONS. 65 articles of incorporation should be placed in the hands of competent attorneys. Forms of incorpora- tion papers in common use in Ohio, are given in another place.* OFFICERS. The constitution generally names the officers of the association and the time and method of their election. As soon as the constitution and by-laws have been adopted it will be necessary to complete the perma- nent organization of the association by the election of the prescribed officers according to the method laid down in the constitution. The same care must be exercised here as in all other steps incident to the formation of an association. The officers are to occupy very responsible positions and should be men possessing ability, integrity, and popularity. Practi- cally they will have full control of the affairs of the association. Its success will depend very largely upon the attention they give to its business. The interests of shareholders will be promoted or injured according to the degree of faithfulness and ability with which they discharge their duties. HEADQUARTERS. Before an association can go into regular opera- tion, it will have to establish permanent headquarters. These should be inexpensive, centrally located, con- venient, clean, and respectable. Many an association has failed to reach its greatest degree of usefulness simply because it has made a mistake in locating its headquarters. *) See Chapter on Forms. 66 MANUAL FOR The headquarters should be fitted up inexpen- sively but conveniently. There should be desks, tables, and seats sufficient for the transaction of the business of the association. Bach association should have a safe for the proper protection of its books, papers, and such sums of money as may be tempor- arily in the hands of its officers. The officers are made responsible for the custody of the property of the association, and are compelled to give bonds for its security. They should be provided with a safe place of deposit for everything for which they are made responsible. After the headquarters have once been established it should be understood that they constitute the regular business office of the association, and that all communications, notices, etc., intended for the asso- ciation should be addressed to these headquarters, and that they will, if so addressed, receive prompt atten- tion. This implies, of course, that there shall always be some one in, or adjacent to, the headquarters to receive such communications, and that the officers, the secretary particularly, will visit or communicate with the one in charge of the meeting- place, to give personal attention to any business that may require it. All members must be notified promptly of any change in the place of meeting. An attractive sign should be conspicuously dis- played at the headquarters, advertising the association. This sign should give the name of the association, the number and the value of shares, the rate of payments required, and the dates and the hours of the meetings. Many an association has received new members through the display of an appropriate sign. Directors BUILDING ASSOCIATIONS. 67 should not be over-economical in this connection. Money judiciously expended in advertising an asso- ciation will bring desirable returns. In England the statutes require building societies to display signs in some such form as described above. On these signs, and on all the printed matter, the word "Limited" must always follow the title of the society. This is intended to show that the liability of share- holders is limited to their actual shares in the society. MEETINGS. Meetings should be held generally in the evening, that evening being selected which is most convenient to members and officers. It is well, if possible, to select an evening on which no other association meets in the vicinity. Monday or Saturday evening is usu- ally the best for meeting, for workingmen are gen- erally paid on those days and like to make their weekly deposits at once. From October to April the hour for receiving dues, etc., may be from 7:30 to 8:30 P. M., and from April to October from 8 to 9 P. M. After this time the directors hold their regular meet- ings. But this question should be governed entirely by local circumstances and the convenience and wishes of shareholders. NEW LEGISLATION. The suggestions of this chapter are necessarily of a general character. In each state they must be carried out according to the conditions established by the existing statutes. So many new laws are being enacted that changes are necessary in the details of the organization and work of associations from time to time. CHAPTER VII. STOCK AND STOCKHOLDERS. STOCK AND SHARES. The stock of a corporation is defined to be "that money or property which is put into a single corporate fund by those who, by subscription therefor, become members of the corporate body." This common fund or stock is divided into equal parts called shares. The number and value of shares into which stock is divided is fixed by the general statutes and by the rules of the association. A person becoming a mem- ber of a corporation subscribes for a certain number of these shares and is known as a shareholder or stockholder. This subscription binds him to pay into the common fund in regular installments, the sum represented by all of the shares for which he has subscribed. The number of shares one member may hold is usually fixed by the constitution or by-laws. In some states the statutes fix the number of shares that may be held by any one person or corporation. In some instances no limit is fixed to the number of shares that may be held, but only a specified number may be voted. The minimum amount of stock to be taken that is to say, the number of shares for which (68) MANUAL FOR BUILDING ASSOCIATIONS. 69 subscriptions must be made before an association can begin operation is generally determined by the state laws and the rules of the association. INCREASE OF STOCK. The maximum capital stock of an association is fixed originally in the articles of incorporation and by the constitution. But in most states it is competent for the association, by virtue of authority given it for that purpose in the charter, to increase the stock within the limits established by the statute, and in the manner required to legalize such change. This increase of stock should be made only when all other stock is taken by bonafide subscription, since its issue involves additional expenses. An increase of stock must always be made in strict accordance with the legal provisions, and should therefore be undertaken only under competent legal advice. There can be no uniform rule laid down concerning increase of stock. All depends upon the nature of the association, the rules it has adopted, and the provisions of the statutes under which it operates. In terminating associations, for instance, there can be no arrangement for increase of stock as the term is generally understood. STOCK AS PROPERTY. The ownership of a share or shares of stock in a building association does not give the holder a pro- prietary right in the property of the association. It simply gives him the right to share in the surplus profits obtained from the use and investment of the revenues of the association. The funds of the asso- ciation may, for instance, be invested exclusively in 70 MANUAL FOR real estate. The shares are nevertheless merely per- sonal property and do not entitle the holder to any individual proprietorship in the real estate belonging to the association. SHARES TRANSFERABLE. Shares of stock in a building association may, like other personal property, be transferred from one owner to another. The transfer is made " by assign- ment and delivery." The method of transfer should always be specified in the constitution or by-laws of an association. Of course no transfer of stock can be made when such transfer trespasses in any way upon the corporate rights of the association. A member who is in arrears can not transfer his stock until he makes settlement to date. On the other hand the association can not resist such transfer where the holder of the stock has complied with all the necessary conditions. Usually a fee, called the transfer fee, is charged to the person to whom a transfer is made. This is an equivalent to the admission fee charged to new members. STOCK PAYMENTS OR DUES. A member of an association is the holder of one or more of its shares of stock. The par or paid-up value of a share is fixed in the constitution at such amount as may be decided upon, generally from $200 to $500, This par value of a share in its expected value. Its actual value is a very different thing, especially during the first years of a shareholder's membership. A subscriber for a share of stock of the par value of $500 has simply made an agreement to pay into the asso- BUILDING ASSOCIATIONS. 71 ciation a regular weekly or monthly installment of a certain amount, which periodical payments are to be continued until the accumulated payments, together with the accrued dividends thereon, shall amount to the sum stipulated as the full value of the share. These periodical installments are called stock- pay- ments, or dues. It is seen, therefore, that the actual value of a share at any time is determined solely by the amount paid in and accumulated up to that date and not at all by its face value. The regular payment of these periodical contributions by members is the prime dependence of the association for its success as an enterprise. The constitution and by-laws of every association, therefore, must prescribe carefully, the time and manner of making these payments, and fix penalties for default of payment. This subject is discussed further in its appropriate place in another chapter.* PAID-UP STOCK. A share of stock is paid-up when it has reached its full value. Generally shares are paid for in regular periodical installments, as explained in the preceding section. Since each stockholder shares equitably in the profits of the business of the association, from time to time dividends are declared and placed to the credit of the different stockholders. These dividends may be drawn out, but are usually left to stand to the credit of the shareholder. When the total amount of dues and dividends to the credit of any stockholder equals *) See Chapter VIII. 72 MANUAL FOR the full amount of his shares, the shares are paid-up or have matured. A subscriber to the stock of an association who simply is seeking a safe and profitable investment for his money may prefer to pay in the full value of his share or shares in one payment at the beginning, instead of in numerous small periodical payments. In this case the stock is paid-up, or matures, at the very beginning. If the owner of paid-up stock does not desire to draw out his money the directors may, at their dis- cretion, issue a "certificate of paid-up stock" to him. Paid-up stock is entitled to share in the earnings of the association like running stock, unless restrictions are made in the constitution or by-laws. Holders of paid-up stock may withdraw it, the same as running stock, upon proper notice. Paid-up stock certificates are negotiable and may be sold or transferred, like the stock of a bank or other corporation. It was formerly the custom, which is still followed to a great extent, to pay off shares as they matured in the regular course of the association. In a terminat- ing association this of course must be done. In the serial associations, where all the stock of each series matures at one time, it is necessary that there must be a large accumulation of funds toward the end of the series to meet the stock payments which will then become due. The disadvantages arising from such a necessity are readily understood. In the permanent or perpetual associations, where shares are maturing in small numbers from time to time, this large accu- mulation of funds to pay them off is not a matter of so much consequence. The constant addition of new BUILDING ASSOCIATIONS. 73. members supplies the necessary funds to meet the withdrawal of the maturing shares. It is always a question worth considering as to whether the funds should be withdrawn from the association when shares mature. On the one hand, the association may be able to use the money to good advantage and may be crippled in its operations by its withdrawal. This is especially true in the case of a serial association, for it is necessary for the association to hoard its money for quite a while in advance and then to part with the large amount thus saved up. Of course this must limit its operations. On the other hand, unless the owner of the stock has some specific use for it, as in the purchase of property or the paying off of a mortgage, or something of that kind, it may be better for him to leave it invested in the association than to draw it out. The possession of so much money immediately in hand brings with it the tempta- tion to spend it needlessly, or to risk it in some specula- tive enterprise. In the case of a serial association the placing of so much ready capital in the hands of so many persons whose stock has matured may result in the expenditure of a large part of the money which might have been reserved for better uses. Some new features have been introduced in some associations recently in connection with the issuance of paid-up stock certificates. Under the old rule the certificates are redeemable only by special action of the board of directors. The change consists in the attachment of a series of coupons to the certificates* This plan is possible in associations which have an assured prospect of having money to sell or loan for some time ahead. The coupons specify the rate of 74 MANUAL FOR interest. A copy of these coupons will be found in the chapter on Forms. The use of the coupons saves the secretary the trouble of issuing special vouchers for dividends on paid-up stock. In some cases these coupons are accepted as cash for the amount of divi- dend. It is evident that it is only under certain cir- cumstances that these features can be adopted and followed. The rate of guaranteed dividend must be so low as to justify the directors in adopting the plan, and there must be some positive assurance that it can be continued. The rules of an association in reference to paid-up stock should be most carefully drawn so as to cover all contingencies or emergencies. Any member whose stock has matured should con- sider very carefully as to whether or not it will be best for him to draw out his money or to take a paid-up stock certificate and leave the money in the association as an investment. OTHER FACTS CONCERNING STOCK. Various other questions relating to stock have been determined by general usage or passed upon by the courts. Associations have the right of lien upon shares, which extends to all liabilities of shareholders for dues, fines, and other lawful charges. An associa- tion, in extreme cases, may collect by suit the dues of delinquent members who are endeavoring to work injury to the association. In cases where the share- holder has borrowed money from the association his regular dues are not to be credited upon his loan but are to be applied upon his stock account just as the dues of any other member. He may, however, at any BUILDING ASSOCIATIONS. 75 time have his accumulated stock-payments applied upon his debt ; or, if the association holds a lien upon his shares for security of his indebtedness, the associa- tion may, in case of his default of obligations, apply his accumulated stock-payments to cancel his indebted- ness as far as they will reach. In such cases default- ing members have the benefit only of the aggregate of their paid-up subscriptions. But if a member vol- untarily repays the money thus applied, there is added the declared portion of the profits of the association up to the time of the repayment, provided he has not assigned his shares to a third party. An assignee or executor of a member may exercise the same rights in the control of stock as the shareholder himself. Stock may be assigned to an association by a borrowing member as collateral security for his loan, and it is the usual practice of associations to require this assign- ment. Where the stock of a borrowing member is assigned to an association as collateral security and real estate is at the same time mortgaged, the liability falls first upon the stock. If this fails to extinguish the indebtedness then the real estate or other collateral security becomes liable. In order that no question may arise in reference to any of these miscellaneous matters they should all be covered as nearly as possible by explicit rules in the constitution and by-laws of an association. The practice in connection with many features of their work is not at all uniform in associations. Hence the necessity that each association carefully define in its rules the course which it will adopt in connection with all matters concerning which differ- ences of opinion might arise in the absence of rules specially governing them. CHAPTER VIII. DUTIES AND RIGHTS OF MEMBERS. MEMBERSHIP. Membership in a building association is acquired by becoming a holder of its stock. All persons or corporations legally capable of making contracts may become members of an association. In some states, by special legislation, membership is permitted to minors and married women, who under the general law in those states would be debarred. As a rule one association, however, may not become a member in another. There are two classes of members depositors and borrowers. Generally the membership is sought for the purpose of making a safe deposit of the small sur- plus earnings of persons, who otherwise would have to keep this surplus at home where it is unsafe and liable to be expended. These are called depositing members. A person may likewise become a member for the purpose of obtaining a loan, who is called a borrowing member. Every subscriber for stock should pay a specified admission fee and also purchase a pass book. Dues on stock begin from the time of subscription. In asso- MANUAL FOR BUILDING ASSOCIATIONS. 77 ciations as now conducted, payment of back dues is not required, all stock dating from day of actual issue. But dues may be paid in advance, in part or in full. When paid in advance in part, in some associations, they draw dividends. When paid in advance in full, certificates of paid-up stock should be issued. A pass book is prima facie, and generally, suffi- cient, evidence of membership. An association can not deny membership to any person from whom it continues to accept dues. A person who, as a mem- ber, receives the benefits arising from membership, is estopped from denying his membership. Member- ship is terminated by the death of a member, by a transfer of shares, by forfeiture, by voluntary with- drawal, by the dissolution of the association, or by the expiration of the series in which the member's stock stands. Where a member becomes a borrower, his membership may cease by special contract with the association. DUTIES OF MEMBERS. A person who becomes a subscriber for the stock of a building association, thereby enters into a con- tract with the association, all the terms of which he is legally bound to fulfill. Moreover, by subscribing to the constitution and by-laws, or, indeed, even if this formality be omitted, he, as a shareholder, must give his obedience to the rules of the association. A mem- ber must pay his dues, unless he becomes unable to do so, when he should give proper notice of with- drawal. A member should give the association his personal services to a reasonable extent by attend- ance upon the meetings and by the faithful discharge 78 MANUAL FOR of the functions of such offices as he may be elected or appointed to fill. Each member of an association must bear his proportionate share of its expenses. In case of loss he must also share in this. A member of an association can not withdraw in order to evade 'his liability for expenses and losses. His liability to contribute to the expenses ceases only with his mem- bership. FINES AND FORFEITURES. The success of an association is chiefly dependent upon the steady and certain payment of the dues of the members. Whenever a member fails to pay up his dues, to that extent he inflicts an injury upon every other stockholder. The statutes generally pro- vide that associations may lay a tax upon stockholders who willfully or otherwise become delinquent, which tax shall be sufficient to reimburse the other members for their loss caused through such negligence. This is accomplished by a system of fines. Such fines must be assessed in strict accordance with the statutes, and also with the rules of the association. The statutes usually give the association a lien upon a member's stock for arrears of dues, fines, and other lawful charges. Under the general laws of equity, fines, in order to be legal, must be reasonable and can be imposed only by way of punishment for delin- quency on the part of a member in the discharge of his duties as a member. Not more than one fine can be imposed for the same delinquency. Cumulative fines, that is fines levied for the non-payment of fines, have been overruled by the courts, and are in some states prohibited by law. The amount of fines should BUILDING ASSOCIATIONS. 79 be measured by the actual damage which the delin- quency of a member has wrought upon his fellow- members. Directors of an association generally possess discretionary powers in regard to the re- mission of fines. The continued neglect of stock- holders to pay their dues will prevent an association from accomplishing its purpose. If fines are not found sufficient to compel a member to keep up his payments, the association, in order to relieve itself from embarrassment on his account, has the right to declare his stock forfeited and to take possession of it, subject to the constitutional provisions. A forfeiture of stock relieves a stockholder of his membership in the association and consequently of all further obliga- tions in the way of dues. It is very important that the constitution and by-laws shall define carefully the causes for which stock may be declared forfeited and the method by which the forfeiture shall take place. The power to declare stock forfeited usually is vested in the directors or other competent officers, who are generally given some option and discretion in the matter so that under certain circumstances forfeitures may be waived or postponed. It may be of value to present a few practical and specific suggestions concerning fines. The plan which seems to have proved most generally accept- able is the imposing upon delinquents of a regular fine, not exceeding 10 per cent, of the delinquent dues. If at the end of a period of three months the delinquent member is still unable to make his pay- ments, if he is a borrowing member, it will be well to ascertain the balance of his debt, his total delin- quent payments, and total past fines, and to consoli- So MANUAL FOR date these into one charge, and then not add any additional fines, but charge interest on this gross amount at some specified rate until the matter is closed. To the fair-minded director a fine often suggests something of injustice or inequity. While it repre- sents a source of profit to the association it may add to the burden of an already over-burdened member. The delinquency may arise, indeed often does arise, through some misfortune which appeals strongly to the sympathies of the officers and other members. At such a time of adversity the addition of these fines serves to build up a barrier between the member and the association, and to defeat the struggling delin- quent's only hope of escape. On this account some have even advocated the dis- carding of the whole system of fines. All will agree that the imposing of extortionate fines is an evil. Directors should be given discretion in regard to the remission of fines and should inquire carefully into the circumstances of delinquents, and always remit a fine when it seems to them just and right so to do. If the member is a borrower and has become a delinquent through misfortunes or causes for which he is notblameable/his case should be inquired into carefully and he should be aided in any way possible by the association. This is only a part of the spirit of co-operation and mutual interest upon which such a society is founded. Such care and leniency on the part of directors may go far toward popularizing an association, and thus add to its prosperity and use- fulness. Of course what is said above does not apply to BUILDING ASSOCIATIONS. 81 cases of mere negligence or carelessness. Such a shareholder should be stirred up to a sense of his duty by a prompt fine. But delinquencies on account of carelessness are not likely to be continued for any great period of time, as a month or three months. When a shareholder continues delinquent for such a period there should be an inquiry into the circum- stances and a just disposition of the matter. In drafting the rules of an association too much care can not be exercised in order that they may be not only legal but equitable. The constitution and by-laws should be so explicit and unequivocal that every member may understand the obligations he takes upon himself and the penalties to which he lays himself liable when he becomes a stockholder. Directors should also have the right to demand and enforce the resignation of a member for any gross impropriety of conduct which would make his further connection with the association unwise or undesirable. RIGHTS OF MEMBERS. Members may occupy three relations toward an association. Certain rights are vested in them as members of the corporation, or corporators. When a member is an investor only in the association, he is possessed of certain special rights ; and in like man- ner if a member becomes a borrower he secures cer- tain other special rights. CORPORATE RIGHTS OF MEMBERS. Every stockholder has the right to attend all the corporate meetings of the association, whether they be the regular annual or semi-annual meetings, or 82 MANUAL FOR special meetings called for some particular purpose. He has the right to be duly notified of the time and place of all meetings and to take part in their proceed- ings. In some states and in some associations a mem- ber has but one vote whatever number of shares he may hold. In other associations he has one vote for each share he holds. In still others, in the election of officers, he casts one vote for each share he holds, while on matters of general business he has but one vote. In Ohio the law now provides that a member can hold as many shares as he desires, but may not vote but twenty. These qualifications should be clearly and definitely stated in the constitution. The constitution should also declare plainly for or against the right of a member to be represented and to vote by proxy, and if the right is allowed, should define the mode in which it shall be exercised. In some states this matter is determined by the statutes. A member has the right to have access to the books of the association at such times and to such ex- tent as will not interfere with the business of the association and the work of its officers. Owing to the inconvenience, confusion, and annoyance which may arise from a large number of members having frequent access to the books in their efforts to examine them intelligently, it is well for members to forego this privilege as far as possible, and to refer all matters requiring examination to the auditing committee, or other authority empowered to examine into and to report upon the business of the association. A mem- ber has the right to hold office if elected or appointed in the prescribed form. A member may bring suit BUILDING ASSOCIATIONS. 83 against an association upon the same conditions upon which a person not a member could bring suit. A member may, in behalf of himself and his fellow- members, institute legal proceedings against unfaith- ful officers to compel lawful action on their part or to restrain them from unlawful action. This right should, of course, never be used except when such action is based upon the most convincing evidence. Under certain circumstances a member may bring action in court to have an association dissolved. At the termination of an association each member has the right to his equitable share of the profits. RIGHTS AS INVESTORS. A person who invests his money in the stock of a building association has a right to share in the profits of the undertaking in such way as is provided by the statutes and the rules under which it operates. He also has the right to withdraw his funds and member- ship at such times as suit his convenience. But the chief and most important privilege of a shareholder or investor is that of receiving loans or advances from the association. It is this privilege which makes membership in an association attractive and popular among that class of persons for whose benefit building associations are organized and are fostered by appro- priate legislation. Unless, therefore, an association has adopted rules to the contrary, a stockholder has the first claim upon its surplus funds provided he is willing to pay a sufficient premium and can give satis- factory security. 84 MANUAL FOR DIVIDENDS. The statutes as a rule authorize associations to de- clare and to pay dividends out of the profits of their business, annually or otherwise. These profits are calculated at the termination of each fiscal year or half-year. The profits, when declared, are distributed among the members pro rata, according to the amount standing to the credit of each member at the begin- ning of the term, and to the amount each has paid in during the term, and to the length of time it has been in. The rules and practice in reference to dividends vary in different associations. On this account it is not possible to lay down general rules governing this matter. The rules of every association should be explicit in reference to the matter of dividends, for profit-sharing is one of the main features which recom- mend associations to popular favor. The rules must be so drawn that each member shall share equitably in the profits. In the organization of a new associa- tion the plan upon which it shall operate in reference to dividends should be carefully considered, for this may have much to do with its prosperity and success. RIGHT OF WITHDRAWAL. A member who is simply an investor and not a borrower has the right to withdraw from an associa- tion without being subject to a forfeiture of the money already paid in. For the protection of the business of the association this right must be exercised under proper restrictions. The rules of every association should prescribe in detail the method of withdrawal. Usually a member is required to give formal notice in writing to the secretary of his intention to withdraw. BUILDING ASSOCIATIONS. 85 This notice should be entered in a book kept for this purpose, and the attention of the directors should immediately be called to it. In Massachusetts, asso- ciations are compelled by statute to keep a book for the special purpose of recording notices of withdrawal, which is called the "Withdrawal Book." Members desiring to withdraw enter their notices in this book in regular order including the date of entry. The applications for withdrawal are then acted upon in regular order. Directors should be required to set aside from time to time a fund to be held for the accommodation of members desiring to withdraw. While the primary idea of the building and loan association, as already stated and popularly under- stood, is to enable members to become owners of homes, yet it is not the province of an association to inquire into the purpose for which a member desires to accumulate money. A member may therefore use an association not only for the purpose of securing a home, but as he would a savings bank for a variety of purposes. He may desire, (i) to accumulate a fund for the purpose of embarking in some business enterprise, or, (2) for the purpose of meeting some approaching obligation, or, (3) simply of securing a safe depositary for his funds, or, (4) of securing a good rate of interest on his funds while deposited. It would defeat the purposes of some of the members if there were no proper provisions made for the withdrawal of their money and membership at such times as suit their plans and convenience. Hence it is that provision for withdrawals must be made in the rules of the associations. The question has been debated as to what share in 86 MANUAL FOR the profits of an association a withdrawing member is entitled. It has been held in some cases by the courts that a withdrawing member does not possess the right to claim a share of the undeclared profits of an asso- ciation. Such member receives the amount he has paid in and his share of the profits credited and un- drawn at the time of the last preceding declaration of dividends, after there has been deducted from this total amount any fines or other charges still owing by him. If the association has suffered a loss, it is the rule to deduct from the amount which a with, drawing member has paid in, an equitable portion as the directors may deem necessary for the protection of the remaining shareholders. In the case of a pro- spective loss, the settlement of which may be in the hands of an arbitrator or receiver, or may be pending in court, it is usual to withhold some portion of a withdrawing member's money until adjudication, when he is entitled to receive any and all residues of such money withheld, which equitably belong to him. A member's privileges in the association cease as soon as he gives notice in proper form of his intention to withdraw. After that time he can not transfer his stock. A withdrawing member is a creditor of the association until his money is paid him. As such he may bring action to collect the amount due if the association does not pay him in his turn and when the money is in the treasury. The rules of an association should confer some discretionary power upon the directors in reference to withdrawals to be exercised in certain classes of cases. BUILDING ASSOCIATIONS. 87 RIGHTS OF BORROWERS. As already explained the primary purpose of a building and loan association is to loan money to its members. It follows, therefore, that every member of an association who complies with its rules has a right to become a borrower from it. But in negotiat- ing a loan he generally becomes a competitor with some of his fellow-members. A member desiring a loan must, therefore, be prepared to outbid his fellow- members and also to furnish satisfactory security. It should be remarked in this connection, that some associations are allowed to invest their money in real estate or to loan it to persons not members. In such cases associations are not compelled, unless by special provision, to loan funds to members when the money can be used to better advantage in other directions. Questions of this character must be determined by the statutes and rules under which the associations are organized. The amount of money which a member is entitled to borrow is usually regulated by law and the constitution of the association. A member who is a borrower from an association, even though in addition to other security he pledges his stock as security for the loan, continues a member in every sense and must discharge all the duties and may enjoy all the rights and privileges of his original membership except the right of withdrawal and such other rights as may be abridged by the special pro- visions in the contract for the loan. A borrower has the right at such times as are stated in the rules to return to the association, in the aggregate, the sum of money for the payment of which, in installments, his obligation calls. This must, of course, include 88 MANUAL FOR accrued interest angl other lawful charges. He can, in this way, by complying with the constitutional provisions and restrictions governing such matters, release his stock, or redeem property which he may have mortgaged to the association. After such repay- ment, the stockholder continues his membership upon the original conditions and may now exercise the right of withdrawal. The exact amount of money to be paid by a borrower in the aggregate to dis- charge his obligation must be determined by the rules of, and settlement should be made from the books of, the association. This is another matter which should be carefully guarded and provided for in the rules and the contracts, since it has been a prolific cause of litigation. The executor or administrator of the estate of a deceased member may continue the membership if he complies with the necessary conditions and regula- tions. But if he does not find it possible or desirable to do this, it has been held that the estate is entitled to the same privileges and allowances as if the bor- rower had voluntarily paid off the loan. A borrowing member who does not keep up his payments is not entitled to the benefits received by those who meet their obligations. His only offset against the claims of the association is the actual payments he has already made in the way of regular dues and of inter- est upon his loans. Such members are also liable for their proportionate share of the expenses and losses of the association. A borrowing member, when sued by the association, does not forfeit his rights of membership, and is still liable for his regular dues. An association must, even after suit is brought, accept BUILDING ASSOCIATIONS. 89 the payment of a loan with accrued interest and costs and other lawful charges if tendered. Such offer is regarded as a legal tender. If the offer is" rejected the borrower is entitled to cease paying interest upon his debt and to the remedy of an adjudication by court. DUTIES OF BORROWERS. The duties of a borrower are sufficiently indicated in the preceding sections. He must not only keep up his original obligations as a member but must meet his contracts for the payment of premiums and inter- est and must look after the character and sufficiency of his security. Not only are his own welfare and good name dependent upon his faithfulness, but the prosperity of the association and the interests of his fellow-members are involved also in his obligation. All of these things put a heavy responsibility upon the borrower which by every honorable consideration he must faithfully discharge. CHAPTER IX. LOANS AND SECURITIES. SALE OF MONEY. To the end that members of an association may be protected in their right to receive loans, and that all may have a fair opportunity to secure this privilege, the statutes in a number of states, and the rules of most associations, require that at stated times the officers shall offer the money on hand, if it amounts to a certain sum, for sale to the stockholders, or, in some cases, to any other persons willing to become stockholders. The rules or the order of business should specify the time and place at which the money of an associa- tion will be offered for loan, and provision should always be made so that all stockholders may be in- formed of this. It usually happens that a number of persons desire to become borrowers and hence there is competition for the use of the money. When the time comes for the sale, the president or any director or other officer or member who may be appointed auctioneer by the directors, makes announcement that the association offers so many shares or parts of (90) MANUAL FOR BUILDING ASSOCIATIONS. 91 shares for sale. Bids are then received. These bids are in the form of offers to pay certain premiums in regular installments weekly or otherwise as the case may be for each share. The loan is awarded to the highest bidder, provided the security offered is ac- ceptable and provided that, if the bidder is a non- member, he becomes a member before the money is advanced to him. Directors have the right to reject bids if the security offered is not satisfactory. In such cases the loan goes to the next highest bidder or the shares are put up and sold again. Money is loaned in amounts equal to the par value of shares or some specified fractional part thereof, usually not less than one-fifth. Generally when bids of this kind are received and a loan is made at a certain premium the directors will, if they have additional money to spare, allow other persons to take loans at the same premium without asking for bids again. PREMIUMS. A premium is a bonus which a borrowing member agrees to pay for the privilege of having money advanced to him. It is, in effect, the difference be- tween the par value of his stock and the actual amount advanced to him. It represents the amount he is willing to sacrifice in order to anticipate the ultimate value of his stock by obtaining the immediate use of the money which the stock will be worth to him at winding up. The meaning of the term, premium, may perhaps be better understood if the process in the sale of money is reversed. Let us suppose that when an association has accumulated a sum of money which 92 MANUAL FOR is to be loaned to members, instead of the announce- ment of a sale of money to the highest bidder, the announcement be that the association will purchase shares of members at the lowest offer. A member has, say five shares, which will be worth at maturity $500 each, or a total of $2,500. On these shares he has agreed to pay his regular weekly installments until they are paid up. He now offers to sell the prospective value of these shares to the association for a certain net sum of money, the shares to be assigned to the association immediately, and a note or bond to be given for the continued regular payment of the weekly dues, this obligation to be secured by a mortgage on the real estate purchased with the money advanced or on other real estate, or by some other satisfactory security. The difference between the par value of the member's stock at maturity and the net amount he receives for it when thus sold to the asso- ciation again represents the premium which he pays for the immediate use of the money thus secured. Some have questioned as to whether premiums should be charged at all or not. It is argued that associa- tions should not make any charge for use of moneys, and should pay off applications in the priority in which they are filed. In some associations this system has been adopted with great success. It has been held by the courts that boards of directors can not establish fixed rates of premium. NATURE OF A LOAN. The loaning or advancement of money to members is one of the peculiar and distinguishing functions of building and loan associations. This advancement of BUILDING ASSOCIATIONS, 93 money is usually, but not always, an incident to the work of the association in discharging its primary function of enabling its members to purchase or build homes. But whether the money advanced is for this or some other purpose, the loaning of money to mem- bers constitutes the chief actual business of most associations. This is a transaction which is, in most of its elements, so different from other ordinary busi- ness proceedings that it must be considered and governed by special rules applying to it alone. The borrowing member is himself an integral part of the association from which he borrows, owing to it cer- tain obligations and duties which he must fulfill. When he becomes a borrower he receives a certain preference over his fellow- members for which he renders to the association a consideration which be- comes an equivalent to his fellow-members for the preference which he enjoys. In extending to him a loan the association assumes a risk for which the pro- tection of his fellow-members demands that he furnish a sufficient and adequate security and guarantee against loss. This makes the transaction a compli- cated one in the adjustment of which there has been no little confusion in the history of associations. It has been the source of a great amount of litigation in England and in the different states of this country. As a consequence of this the exact status of the bor- rower toward the association and of the association toward the borrower is now becoming more clearly denned. The most that can be said here is that the constitution and rules of the association should be so carefully drawn in conformity with the statutes and should state so fully the conditions under which 94 MANUAL FOR loans can be made to members, and should so fully describe the methods of procedure that mistakes may be avoided. In making or carrying into effect the rules relating to the loaning of money to stockholders, it should be borne in mind that the borrower continues an active member of the association and, as a partner in its affairs, is interested in the enforcement of the con- tract against himself as a borrower, and that, in a contract between an association and a borrowing member, whatever goes outside of the statutory and constitutional provisions is invalid. MORTGAGES. The ordinary security given by a member for loans and advancements made to him is in the form of a mortgage upon real or leasehold estate which he already holds or which he purchases with the money advanced to him. The taking of these mortgages is one of the most common incidents in the work of an association in fulfilling the functions for which it is established. A member may give a mortgage upon freehold or leasehold property for which he can show a clear legal title. He may give a mortgage upon the real estate of another person who in due form submits his property for this purpose. Mortgages must be drawn directly in accordance with the statutes under which an association operates and with its own con- stitution and rules. Since the statutes under which associations are established differ in the several states, and since constitutions and rules governing this matter vary in different associations, there are many forms of mortgages in use. To enter into a full dis- BUILDING ASSOCIATIONS. 95 cussion of these forms would be foreign to the pur- pose of this work. Two forms in common use are printed in another part of this book,* an examination of which will assist in arranging for this feature of the work of an association. It is sufficient to insist here that the rules be so carefully drawn in reference to this subject that mistakes will not be possible. The mortgage itself should contain the terms and conditions upon which it shall be foreclosed, and should specify the disposition to be made of the funds realized from the sale of the property. In case of fore- closure, where the sum realized is insufficient to liqui- date the entire amount of the debt, the member is still liable for the balance. OTHER SECURITIES. Money may be advanced to members upon nation- al, state, county, or city bonds as collateral security, when such action is authorized by the statutes and the rules. The acceptance of such collateral secur- ities is in the discretion of the directors. The bor- rower must give his note for the amount received and the interest to be paid thereon, and transfer his stock to the association. The note should give the name, number, amount, and par value, of the bond or bonds given as collateral security, and should name the con- ditions upon which the security becomes forfeited to the association. Forfeitures usually become opera- tive if the borrower shall fail to pay up his regular dues and the interest for a certain term, say three months, at most not longer than six months. The *) See Chapter on Forms. 96 MANUAL FOR directors may, after notifying him, declare his security forfeited and may proceed to dispose of the bonds in the most profitable manner for the purpose of liquid- ating his obligation. The borrower may be allowed to renew his note from time to time at the discretion of the directors. ASSIGNMENT OF STOCK. When a member's stock is assigned to an associa- tion as collateral security for a loan the assignment is usually required to be made in absolute form. But nevertheless the association can not use or dispose of the stock except for the purpose for which the assign- ment is made. The stock is to be held by the associa- tion until it is paid up by the member. The associa- tion then cancels the stock and returns to the member his bond. But if the member fails to keep up his payments on the assigned stock, the association may declare the stock forfeited, and apply what he has already paid in toward the liquidation of his debt, and may transfer the shares to some new applicant or applicants for membership. In case of delinquency on the part of a borrower who has assigned his stock to the association as collateral security, the association first avails itself of the amount he has paid in on the stock, and then proceeds in an effort to realize the balance of his debt from the sale of his mortgaged property and any bonds or other collateral security he may have furnished. SALE OF SECURITIES; DISPOSITION OF PROCEEDS. Directors of associations are bound to dispose of property on foreclosure of mortgages or of forfeited B UILDING ASSOCIA TIONS. 97 securities on the most advantageous terms. This is necessary both for the protection of the association and in justice to the delinquent borrower. The pro- ceeds derived from the sale of securities must be ap- plied as follows: (i) To payment of dues; (2) to payment of interest ; (3) to payment of premiums ; (4) to payment of fines ; and (5) to payment of costs. If any balance remains it must be paid over to the owner and his receipt in full taken. The rules should be explicit in reference to the forfeiture and sale of securities, for this step involves the highest interests of an association and of its members. APPRAISEMENT OF REAL ESTATE. This is one of the most important features of building association operations. It is in the accept- ance of securities that the association assumes its risks. Every association, of course, has rules govern- ing this matter. Nevertheless, when the appraisers come to the actual discharge of their duties they will find the rules insufficient to cover all the details, and that many incidental matters must be considered and decided in their own discretion. A few general sug- gestions in this connection will be of value, especially in new associations and to those inexperienced in such matters. 1. The members of the association most capable by intelligence and experience should be on the ap- praising committee. 2. The appraisers should always base their valu- ation of property upon information obtained direct by themselves by observation and personal investigation, and should not depend upon hearsay from any source. ;/v - A --^^v ^ n rrrnrSJ O^ivW. 98 MANUAL FOR BUILDING ASSOCIATIONS. 3. They should inform themselves fully in refer- ence to the actual status of the property, as to its rightful ownership, its freedom from incumbrance, and other such matters. 4. They should consider its situation and con- dition with reference to roads, drainage, water, gas, etc. 5. If the property is improved, they should note the character of the building, the quality of material and of workmanship, its arrangement, number and size of rooms, and also incidental matters in the way of out-houses, walks, fences, grading, shade- trees, etc. 6. In making up the valuation they should give full details of items for land and buildings separately. 7. The valuation should be based upon the in- trinsic worth, and not upon competitive or speculative estimates. 8. They should also inquire into the borrower's relation to the association, reviewing his pay- ments, his ability to pay, etc. This last is very important, since many serious troubles arise from members agreeing to pay more than they are capable of doing. CHAPTER, XI. C ORPORATE UOVERNMENT. THE CORPORATE MEETING. A corporate meeting is a meeting of the members of an association regularly assembled. Meetings may be general or special. The members thus assembled in a corporate meeting constitute the supreme power of the association. But in their action they are never- theless subject to restrictions. If the association is organized and incorporated under general or special laws of the state, the corporate meeting must confine its actions within the limits laid down in the charter and the statutes under which it acts. The corporate meeting fixes its own constitution and by-laws in accordance with statutory limitations. But after these are once fixed it has no power to change them except in accordance with the rules which it has established. Where associations are not organized and incor- porated under special charters they are, of course, subject to the general statutes and laws of equity like other incorporated companies. The entire association is bound by the acts of a majority of its members when those acts are legal and in due form. In the (99) zoo MANUAL FOR absence of special provision in the rules of the asso- ciation a question may arise as to what is meant by a majority. It has been held that an association is bound by the acts of a majority of those present at a regular meeting whether they constitute a majority of the members or not. it has been held further that a majority does not necessarily constitute a majority of all members present, but of all the members present and voting. But it is better that the rules of the asso- ciation should state definitely what proportion of the membership shall constitute a quorum for the trans- action of business. Then if this number is not present a meeting can transact no business except to adjourn to some other date. Where the statutes, or the rules of the association, do not fix the quorum, the rule is, that a majority of all those present and entitled to vote at a duly called meeting, shall con- stitute a quorum. Where the statutes do not determine the right of a member to be represented by proxy the question should be settled specifically in the constitution and by-laws. GENERAL MEETINGS. The general meetings of associations are those corporate meetings which occur at the stated times fixed by the constitution or by-laws. The share- holders should meet at least once in six months, generally on the first meeting night in the month following the close of each fiscal half year. The meetings are held at the place designated by the board of directors. Each member must be advised of the time and place of the meeting, either by individ- B UILDING ASSOCIA TIONS. 101 ual notification by letter or otherwise, or by advertise- ment in some paper of general circulation regularly issued in the vicinity. The usual business of such meetings is the election of officers and the determin- ing of the general policy and management of the association. The desires of the members may be ex- pressed through the election of certain persons to fill the offices, who are pledged to a certain line of con- duct in the management of the affairs of the associa- tion. The business of the general or corporate meeting should be conducted according to the order of busi- ness laid down in the rules. The reports of officers is a prominent feature of these meetings. These reports, when represented in proper form, give the members a clear idea of the business of the association, and enable them to determine intelligently as to the policy for its future management. SPECIAL MEETINGS. Provision should be made in the constitution and by-laws for the calling of special meetings. These ought to be so drawn that the officers, whose duty it is to call such meetings, have no discretion in the matter, but should be compelled to act upon the re- quest of a certain number of members. There ought to be also a rule that, in the calling of special meet- ings, all the members must be notified in proper manner, and that otherwise the proceedings of the meetings shall be invalid. Such provisions are neces- sary in order to protect properly the rights of mem- bers. In the absence of these rules, it has been held under the general laws that each member must have 102 MANUAL FOR personal notice, that a reasonable time must be given, and that the call must be issued by authority com- petent to call a meeting. But if all persons entitled to vote unanimously consent, notice of meetings may be waived and the proceedings will be valid. Special meetings can transact no other business than that named in the call. An adjourned meeting may transact any business that may have been lawfully transacted at the original meeting. The acts of a meeting irregularly convened are not binding. MANAGEMENT OF CORPORATE MEETINGS. A few suggestions in regard to the management of corporate meetings will not be out of the way. Under our democratic form of civil government, citizens, through the influence of our ordinary polit- ical methods, become educated to the habit of delegat- ing their authority to others. The result is that many good citizens neglect and ignore their duty as such and leave public affairs to be directed by self- seeking politicians. This custom is too often carried into building associations and other corporate bodies. This ought not to be. Every member of an associa- tion should keep himself thoroughly informed in reference to its business and management at all times. Then he should not fail to be present in person at every corporate meeting. At any corporate meeting it should be the busi- ness of some one, usually the President or the Secre- tary, to make a clear statement of the purpose of the meeting, and to present all the facts in connection with the work of the association which bear upon the BUILDING ASSOCIATIONS. 103 matter to be considered. It is well, also, from time to time in such meetings, both for officers and mem- bers, to review the provisions of their charter, that they may be sure that their operations are all kept within the proper legal and constitutional bounds. It is easy, when the members and officers of an asso- ciation are careless, for its methods and operations gradually to slip outside of the limits which they were originally intended to occupy. At any regular corporate meeting there should always be a clear, business-like statement of what the association has accomplished during the past year, and what it is expected to accomplish during the coming year. These facts being before the members, they are able to determine whether the association is accomplishing the work for which it wa*s intended. If it is, well and good ; if not, measures must be taken to correct its mistakes. Members should also bear in mind that no associa- tion is of any worth or power, simply from the fact it is an association. Its power and efficiency is only the joint power and efficiency of the men and women who compose it. If these do not attend its meetings, if they neglect its business, or go to meetings and simply hold up their hands and vote like machines, and give no active thought to its business through the whole course of the year, they are an incumbrance, rather than a help to it. The officers and directors should have evidence of the never-lagging interest of the membership. This will not only put a proper check upon them in their management of the associa- tion's affairs, but it will also spur them to continued diligence and efficiency. Any officer or member of an 104 MANUAL FOR association who satisfies himself with the mere per- functory discharge of the routine duties of his position makes a serious mistake. His active and intelligent participation and interest in the association's affairs at all times are necessary to its highest success. OFFICERS: THEIR ELECTION AND GENERAL POWERS. As stated before one of the principal functions of the corporate meeting is the election of officers. This must take place in the manner and at the time re- quired by the constitution and by-laws. If these pre- scribe no particular form for elections, then it has been held, that no election conducted in good faith will be set aside. Some associations provide by con- stitutional rule that a double or larger number of can- didates for each office shall be nominated, from whom the members are to elect ; but it has been held, in some states, that a member receiving a majority or plurality of votes, as the case may be, is duly elected and entitled to hold the office, even if his name is not on the list of those nominated. When candidates are properly nominated and the election is held in due form and at the proper time and place, those candi- dates receiving a majority of the votes cast are elected. This is true even though the majority of the entire association may refrain from voting, except in case the constitution makes a provision to the contrary. If from any cause the election is not held at the proper time set in the constitution, the association nevertheless continues, and the old officers are in authority until their successors shall be duly elected and qualified. The casting of improper votes at an election does not vitiate it unless it can be shown that BUILDING ASSOCIATIONS. 105 the result would have been different had they not been received. On the other hand, if it can be shown that legal votes have been rejected and their reception would have changed the result of the election, the election is vitiated and a new one must be held. Ballots containing the names of a less number of directors than are provided for must be received, but those containing a greater number must be rejected. An inspector or judge of an election may also be a candidate. The acts of de facto officers are binding upon a cor- poration, especially so far as these acts affect third parties, even though it may afterwards be decided that the officers were ineligible. The management of the affairs of an association is entrusted so entirely to its board of officers that the greatest care should be exercised to select only proper persons as officers, and that there should be no ques- tion as to their regular and lawful election. CHAPTER X. ELECTION AND DUTIES OF OFFICERS. OFFICERS REQUIRED. The officers of a building association are the same as of any other corporation or business body. They consist usually of a president, a vice-president, a secretary, assistant secretaries, a treasurer, an attorney and a board of directors. ELECTIONS. The constitution provides for the time, place, and manner of elections. Since the officers are the actual managers of the business of the association the pro- visions for their election should be so plain and explicit as to leave no room for doubtful or uncertain action. The officers are to be clothed with legal powers. There should be no question as to their legal qualifications. Attention has been called already to the necessity, in the organization of an association, of selecting for officers those persons who, by character, ability, and experience, are best qualified to serve in that capacity. The bearing of the officers, their intelligence, and their business ability and sagacity, will have much to do with an association's popularity and success. (106) MANUAL FOR BUILDING ASSOCIATIONS. 107 They must be polite to all the members and other persons visiting the headquarters of the association or calling upon them privately ; they must be ready to respond intelligently to all proper inquiries relating to the business of the association ; they must require that all moneys in which the association is interested are properly and promptly accounted for ; they must be quick to seize upon every advantage that can be used to further the interests of the association ; they must carefully guard all investments or loans of the association ; and must, in general, be as watchful and careful of all matters pertaining to the association, as any successful business man must be of his own inter- ests and business. Officers by faithfulness may build up an association and make it very strong, while by indifference and irregularity of proceedings, they may destroy its popularity and usefulness, and even its existence. As the usual elections recur year after year the question of the re-election of certain persons to certain offices will arise. There is one rule which should always prevail at elections, and that is to seek the greatest good for the association. This can be accom- plished in two ways: by the re-election of faithful and efficient officers, and by the introduction of new blood, new energy, and new influences into the manage- ment. In connection with the re-election of officers it should be borne in mind that no one member should be overburdened with the work of an association. On the other hand an association should secure the benefit as far as possible of the knowledge of its affairs and workings possessed by its experienced officers. A good rule is other things being equal to re-elect io8 MANUAL FOR the salaried officers as long as their work is satisfac- tory and no special reason arises for making a change. Their knowledge of the details of the business is very valuable. It is best to re-elect some of the other officers, especially directors, at each election. It is only on rare occasions where there is to be some radical change in the management of an association, that an entirely new board of directors should be chosen. Where there is no necessity for making a change, it is best to re-elect a strong representation from the old board. Indeed, in order to avoid sudden and unfortunate changes in the board and to secure opportunity at the same time for desirable rotation in office, some associations adopt a rule to the effect that at the first election one-third of the directors shall be elected for a one-year term, one-third for two years, and one-third for three years. Then at each subse- quent election one-third of the whole number of the board are chosen for the full three-year term. DUTIES OF PRESIDENT AND VICE-PRESIDENT. In general terms the duties of the president and the vice-president, as indeed of all the officers of an association, are, in the absence of special provisions and limitations, the same as belong to similar officers in other like bodies. Thus, unless there be special provisions to the contrary in the constitution or by- laws of an association, it is the duty of the president, or, in his absence, of the vice-president, or of one of the vice-presidents (who act in their numerical order), to call meetings of the association, and to preside and preserve proper order at the same, to sign the con- tracts of the association, and to execute other official BUILDING ASSOCIATIONS. 109 documents, to sign warrants drawn upon the treasurer, to keep the seal of the association, and, with the board of directors, to make provisional arrangements to meet all the various unprovided for emergencies and neces- sities of the business of the association. The president appoints all committees for the appointment of which no other provision is made. For the relief of the president and other officers from uncertainty and unnecessary and irksome responsibility, the constitu- tion and by-laws should specify as fully and clearly as possible the duties imposed upon each of them. DUTIES OF SECRETARY. The office of secretary is in many respects the most important in the association. He is the custodian of its business and records, and the source of informa- tion concerning its affairs ; he keeps the minutes of all the official proceedings of the association and its board of directors; he conducts the correspondence; he keeps the financial accounts ; and is, in general, the agent, and to a large extent, the acting manager of the entire business of the association. He attests the signature of the president on all the official documents. He should submit quarterly, semi-annual, and annual reports to the association, as may be required by the rules. These reports should always be written out plainly and neatly ruled, and should present a full account and summary of the business for the preceding term. They should include a complete balance sheet, giving a detailed exhibit of the profit and loss ac- counts, and a statement of all assets and liabilities of the association. Usually the directors authorize the no MANUAL FOR secretary to have these reports printed for distribution among the members.* The secretary possesses unusual powers and carries heavy responsibilities. The constitution and by-laws should give him clear and specific instructions in regard to his duties and liabilities. No mistake should be made in the selection of the secretary, and when once chosen he should have the cordial support and co-operation of all the shareholders. ASSISTANT SECRETARIES. The business of some associations is so large, or the secretary is so occupied with other business, that the employment of assistant secretaries is necessary. They are usually employed by the directors. Their duties are clerical, and they work under the direction of the secretary. DUTIES OF TREASURER. The treasurer is the custodian of the association's funds. Unlike the president and secretary, he posses- ses no discretionary powers. His duties are entirely ministerial. He must give his receipt for all money placed in his hands, and is responsible for all the funds of the association he thus holds. He may not pay out any money except upon warrants drawn in due form in the manner provided by the rules of the association. He must keep correct accounts of all receipts and pay- ments. He is not liable for the payment of warrants duly drawn by the proper officers of the association, even though the money is wrongfully applied by them. * See Chapter on Forms. BUILDING ASSOCIATIONS. in He can not hold the association responsible for money which he may advance for legitimate purposes without a warrant. As a general rule the treasurer should be allowed to make his own selection of the bank or place of deposit for the funds of the association, unless the question is fixed by the statutes. If, however, the board of directors select the place of deposit, he is not liable for loss of the association's funds by the robbery or failure of the bank which they have selected. When the treasurer himself selects the bank of deposit he is not liable for loss by robbery or failure, provided that he can show that his action has been free from fraud or negligence. DUTIES OF DIRECTORS. The board of directors are the responsible man- agers of the association. In them is vested the power to order and transact all business for the association, and their acts are the acts of the association. Their powers and limitations must be defined by the con- stitution and by-laws. If they fail of the full discharge of their duties as thus defined, they are responsible to the members of the association. If on the other hand they transcend these powers of the association, they themselves become personally liable to the parties interested. It may be said in general terms that the directors of an association have charge of the disposition of the funds, the making of loans, the acceptance of securi- ties, the filling of vacancies in the offices, and the pro- viding of proper compensation for services when this is not otherwise fixed. They are subject to the con- trol of the corporate meeting, but not of individual ii2 MANUAL FOR members. A member may, however, on behalf of himself and others, proceed by law against the direc- tors for illegal acts. The number of meetings of the board of directors is usually fixed by the constitution, but the time and place may be determined by the directors themselves. When the association has an office or regular place of business, it is best that the directors' meetings be held there. The time of the regular meetings of the directors should be fixed and made known to the members of the association. The directors may call special meetings, both of the members in general, or of their own body. All directors must have notice of all meetings, and acts of meetings irregularly called or convened are invalid, except so far as the interests of a third and innocent party may suffer. The rules of an association should specify carefully what number of directors shall constitute a quorum for the trans- action of business. Except by special provision a director can not delegate his powers to another person. But the full board may delegate some portion of its work to a committee appointed to attend to it. They should keep full and accurate minutes of their trans- actions. A director, as an individual, may make a contract with the association, provided he secures no special advantage not common to other members. A director becomes personally liable to the stock- holders for losses when they are occasioned by reason of fraud or connivance at fraud upon the association. Directors are liable for embezzlement, willful mis- conduct, breach of trust, or gross inattention and negligence. They are not liable for mistakes of judg- ment, however absurd, provided they are honest and BUILDING ASSOCIATIONS. 113 within the scope of their powers and discretion. A director who is a party to a fraud upon an association is barred from sharing in its benefits. DUTIES OF TRUSTEES. The duty of trustees, where such officers are ap- pointed, is to hold and convey titles for the association under the order of the board of directors. Very few associations now have trustees, this being regarded as useless, unnecessary, and cumbersome. THE ATTORNEY: His APPOINTMENT, DUTIES, AND COM- PENSATION. Every association must have a duly authorized legal adviser. He should be a regular officer of the associa- tion. He usually is designated officially as attorney, though he is sometimes termed solicitor, or coun- selor. The manner of his appointment differs. In some associations he is elected at the same time, and in the same manner, and for the same term, as the other officers. But more frequently and this seems much the better way he is selected and employed by the board of directors. In making this appointment the directors can not be too careful. His position is one in which he may do great good or harm to the association. There are emergencies in which the wel- fare and even the continued existence of the associa- tion will depend almost entirely upon his intelligence, honesty, and faithfulness. He should be a man of good standing in his profession. He should have a moderate independent practice, not so much as to absorb his time and thought to the exclusion of the care of the affairs of the association, nor, on the other ii4 MANUAL FOR hand, so moderate as to induce him to undertake arbitrarily to make business out of the association. Many an attorney, who has the real interests of his association at heart, is the most active and efficient agent in securing desirable members in its organiza- tion, and in so increasing its list of shareholders from time to time as to put it upon a permanent working basis. The attorney should be a man of such character as will give the directors some degree of pride in placing his name upon their reports and documents. In England the attorney must be appointed and com- missioned under the official seal of the society. Whatever may be the method of his appointment it is the duty of the attorney to act as the legal adviser of the association upon all legal matters connected with its business. He advises the other officers and the directors in regard to their functions and duties and the proper disposition of the business of the asso- ciation. He examines records and titles. He prepares or passes upon the forms and blanks to be used by the association, and gives his advice in the execution of all official documents. The following article from The Co-operative News, of Cincinnati, written by Hiram M. Rulison, Jr., an attorney of much experience in building association matters, covers this whole subject so well that it is worth incorporating here. Mr. Rulison says : "After the appraising committee has completed its work in actually inspecting the property as to its value, it is then that the duty and responsibility of the attorney begins. It really should begin before even the work of the appraising committee begins, by carefully preparing a plat showing the exact location of the property to be appraised, so that no mistake could possibly be made and no excuse could be BUILDING ASSOCIATIONS. 115 offered, in case the wrong property should by any accident be appraised for the loan. In one or two cases where gross frauds were attempted to be perpetrated, this was the excuse offered by the apprais- ing committee ; that they had appraised the wrong propertj 7 . This could be prevented in every case by a careful preparation by the attorney of a proper plat. Some attorneys think, in order to retain their position and stand well with the board, that all they are called upon to do is to report on the title as they find it, regardless of the actual value of the property or the financial standing of the prospective borrower. No greater mistake could possibly be made. An honorable attorney will report all the facts as he finds them, and if he does not do so he is violating a sacred duty he owes to the hundreds of trusting depositors, who are rely- ing upon his honor and integrity to protect their hard-earned savings. One of the recent failures of a well known associa- tion could have been avoided, had the attorney who examined the title of the property on which an $8,000 loan was granted, been honorable enough to inform the board that the property was in a deep gully ; that it was taxed at only a few hundred dollars, and had only recently been appraised for a loan in another association at only $1500. A failure to disclose facts of this kind is nothing but down- right dishonesty, and would lead unsophisticated people to believe that such an attorney was 'interested.' About the same time, a prospective loan of about the same amount was defeated and the association saved by the brightness and honesty of the attorney, who boldly reported all the facts to the board and insisted upon a full examination of all the facts, which disclosed a similar state of affairs as first referred to. The plunderers were exposed and the depositors' money saved. A careful attorney would report, if the fact came to his notice, anything of an unfavorable nature that might be devel- oped in regard to the prospective borrower ; as for instance, that all the other property which the party owned was covered by mortgage to its full value; that the limit was being stretched in the present instance ; that other loans had been foreclosed ; that the present loan was a mere shifting around, u6 MANUAL FOR 'borrowing from Peter to pay Paul,' or anything else that might come to his notice. No doubt the borrower would denounce such an attorney for being a meddlesome man, but the directors and depositors would bless him. The attorney should always report the tax valuation of all property exam- ined ; for although the tax value is scarcely ever a fair crite- rion to measure values by, still it is in most cases a great help. The officers of the board and the appraising committee may be the most careful men in the world, and may perform all their duties in the most careful manner possible, but it will amount to nothing if the attorney is derelict in his duties. He can not make too careful an examination. This he sometimes realizes when too late, especially when he happens to overlook a mortgage, judgment, or a mechanic's lien, and is called upon to make the amount good, as sometimes happens. If so much care is required of an 'honest attorney' just think how completely an association is at the mercy of a man who is careless in his habits, or who chooses to be dishonest and to work in collusion with a dishonest borrower ; he could bankrupt the association in short order more completely than either the secretary or the treasurer. Only men of honor, integrity, ability, and experience, should be entrusted with this great responsibility. Not the least of their duties is that of approving the sufficiency of the sureties on the bond of offi- cers. And this should always be carefully attended to. I have even thought that an attorney should be somewhat familiar with book-keeping, and that he should be willing to serve occasionally on an auditing committee in order to see that this branch of the business was properly attended to. In other words an attorney should be one of the best posted men in all the doings and workings of an association, including not only the law but the best methods of management and business, and should be willing to assist in any and every way possible ; for if any one person more than another receives a benefit from the association, it is the attorney. It is true that his compensation for the examination of titles is small, and if that were all the pay he received he could hardly afford to do the work for the money. But an obliging and accommodating attorney who will not neglect his associa- tion, but will attend the meetings with some degree of regu- BUILDING ASSOCIATIONS. 117 larity and be on hand with a word of advice when most needed, and let the people get in the habit of meeting him on these occasions regularly, will find a steady flow of business from this source alone, which will amply repay him for the time and labor expended. More associations are organized by attorneys for the sake of getting the business, than by any other class of individuals ; and yet, strange to say, the attorney is usually the one to be the first to lag behind when there is any work to be done, unless a comfortable fee is in sight. I have frequently heard of instances where the attorney failed to attend the weekly meetings for months at a time. These attorneys are not enthusiastic advocates of building associations. On the other hand the attorney who attends regularly finds his hands full of business, keeps his association out of useless litigation by a little timely advice, and is one of the best friends of the institution. Many of the patrons and borrowers are working people whose time is not their own, and it would be a manifest hard- ship on them to compel them to lose a day to dance attend- ance on an attorney's convenience, when with a little effort on his part he could have the necessary papers signed at the association and thus oblige a client, as well as save him a day's wages. I do not say this could always be done, but sometimes it certainly can be, especially where there are a large number of mechanics who are compelled to sign a release of any claim on a building before they can draw pay for labor or materials. It would be a hardship to compel six or eight men to lose a day to come to a lawyer's office when all the business could be done at the association without loss of time. A building asso- ciation is certainly a co-operative institution, and every one connected with it should be willing to do his part and his duty. On the other hand directors and other members should not expect, (as is too often the case) that the attorney is bound to attend to their private business at building association reduced rates. It is true he may be able to cut ra.tes some on the score of friendship and old acquaintance, and this he undoubtedly will and does do, but an attorney would have to be a person of herculean capacity for work, to be able to make Ii8 MANUAL FOR both ends meet and pay expenses, if all his work were done at these rates. This, however, is a fact that is not always takeii into consideration by members, and sometimes is productive of hard feelings, if the attorney will not, or can not, consent to work for all his friends at cut rates. The association too frequently criticises an attorney's bill for foreclosing a mort- gage, looking upon this expenditure as a dead loss, yet it is one of the most important, and sometimes one of the most difficult of an attorney's duties, and sufficient compensation should be allowed to insure careful and correct work on the part of the attorney. All questions have two sides, and while an attorney should be able and willing to do his duty thoroughly and conscien- tiously, he should at the same time receive such treatment from the association and its membership, as will at least assure him that they appreciate the interest he may take in their welfare, and that they believe that the ' laborer is worthy of his hire.'" If the attorney does not receive a stated salary, the directors should fix a system of fees to be paid him for the examination of titles and other services. Some associations have a graded system of fees for the examination of titles. If a member borrows one share, he is taxed a certain amount for the examination of his title to the property he mortgages. If he bor- rows more than one share, he is taxed a proportionate amount for each additional share. This rule is mani- festly unjust to attorneys, for it requires as much time and work to make an examination of a title if but a single share is borrowed on it, as if it were security for ten or twenty shares. Since the examination of titles requires care and involves responsibility, an attorney should have a good, reasonable fee. For instituting and defending suits, and any other unusual legal business, special fees should be fixed by the directors. BUILDING ASSOCIATIONS. 119 BONDS OF OFFICERS. It is customary to require bonds from certain officers of associations. Where the statutes give no direction in this matter it should be fixed by the asso- ciation itself in its constitution and by-laws. The particular object of a bond is, to enforce respons- ibility, especially with those officers who have the handling and custody of the funds, or of any officer whose trust exposes him to temptation and the asso- ciation to the possibility of loss. The by-laws or rules should specify which officers shall give bond and the amount of bond required in each case. The ap- proval of bonds usually rests with the directors. A bondsman is liable only to the extent of the precise terms of the bond. All officers who are required to give bond should have them ready at the first meet- ing after their election and hand them in at that time. Bonds should be carefully drawn so as to meet all legal requirements. Each officer who is to give bond should furnish at' least two first-class sureties. The president should give a bond of from $2,000 to $4,000; the vice-president, $2,000 to $4,000; the secretary, $2,000 to $5,000; the assistant secretary, $500 to $1,000; the treasurer, $5,000 to $10,000; members of appraising committee, $1,000 to $3,000, each; the attorney, $5,000 to $10,000. Members of special committees should also in some cases give bond with amounts in proportion to the duties and responsibilities devolving upon them. RESPONSIBILITIES OF OFFICERS. No person should be selected as an officer of a building association who is, from any cause, disquali- 120 MANUAL FOR fied for a faithful discharge of the functions of his office. Whoever accepts a position as an officer should faithfully and conscientiously discharge the duties imposed upon him. Hence, by agreement among the members of an association, certain provi- sions are usually made in the constitution or by-laws for the punishment of such lapses from duty on the part of officers as are not of a criminal character. Thus it is often provided that the officers shall be subject to fines for certain classes of offenses or to removal for certain other offenses. The rules may be so drawn as to apply to cases where the offense is not directly against the interests of the association or its members, but may simply affect the moral character of the officer and his standing in the community, thus rendering him unpopular and unfit for his position of trust in the association. An officer who becomes de- linquent in his position as a member of the associa- tion, may be considered as unfit to occupy a place as an officer. The power of fixing penalties, such as fines or removal from office, may be fixed in the board of directors, or may rest in the association at large. The criminal liability of officers of a building asso- ciation is the same as that of officers of other cor- porations or of individuals generally. No man, whatever his position, is permitted to appropriate to his individual use or advantage that which is not his own or to which he has not obtained a legal right. REMUNERATION OF OFFICERS. What officers shall receive compensation is deter- mined by the provisions of the constitution and by- laws. It is the general custom to leave the amount BUILDING ASSOCIATIONS. 121 of compensation to be paid to the different officers to the discretion of the directors who fix the amount by special contract with the respective officers. When the salary is fixed by the constitution or by-laws the officer may claim the full amount upon the strength of that record alone. If his duties become enlarged, and the salary is then inadequate he can not claim additional compensation. His only remedy lies in securing a change in the rules or in resigning his position. In cases where compensation is not fixed by the constitution or by-laws, and where no express contract has been entered into, it rests in the discre- tion of the board of directors as to whether any com- pensation shall be allowed or not, and to what amount. It should be borne in mind that a building association is an organization for the mutual advant- age of its members, and the fundamental idea is that each member shall work for the benefit of all. On this account it is expected that each member hold himself ready to contribute his personal services within reasonable limits. Therefore, even those who are in official position are expected to render a fair proportion of service without remuneration and that they are to be compensated only when it would be unjust to them as individuals to expect their services without remuneration. A salaried officer can not claim extra compensa- tion for work done in the line of his duty. Officers must look only to the funds of the association for their remuneration, and can not recover the amount of their salaries from individual members or directors. 122 MANUAL FOR SALARY OF DIRECTORS. It has been almost the universal custom that di- rectors should serve without remuneration. Lately the question of allowing them pay for their services is being seriously considered. Indeed, in some associa- tions directors are paid for their services either directly or indirectly. Some of the considerations urged in favor of the payment of directors may be mentioned. Their services are indispensable to the operations of an asso- ciation. It is wholly impracticable for all the mem- bers of an association to come together at each meet- ing and attend to the receiving of money and all its routine business operations. Even if they could so come together, it would be impracticable for such a body of people to do such work. Many of them do not know how to do it, and so many coming together they would simply be in one another's way. " What is everybody's business is nobody's business." On account of these circumstances associations are compelled to delegate authority to certain selected members to attend to the prosecution of their busi- ness. These selected members are called directors. Because certain stockholders are selected to serve in the capacity of directors does not make it any more possible or convenient for them to attend the weekly meetings to look after the business than it would be for any other stockholder not so selected. They must lose their time and comfort, and thus interfere to a greater or less extent with the prosecution of their own pri- vate business and interests. Again, those stockholders selected to act as directors are so selected because they have that intelligence and knowledge that fit them to attend to such business. Intelligence, knowledge, and BUILDING ASSOCIATIONS. 123 experience are valuable. Hence, other things being equal, a director's time is likely to be of even more value than that of the average stockholder. The directors being charged with the actual man- agement and disposition of the business of the associa- tion, they must carry a responsibility unknown to the other stockholders. The directors are the official representatives of an association. As such they must not only execute its routine business but must repre- sent it in all incidental matters and in emergencies. They are the sources of information to the stockhold- ers and to outsiders. Their work on committees in- volves them in many duties outside of the regular meetings. They must account faithfully for all moneys coming into the possession of the association ; they must keep up the collections and act promptly in case of delinquents ; they must make deposits and investments; they must decide upon and declare dividends ; they must pass upon premium and inter- est rates ; they must accept or reject borrowers and mortgages and other securities; they are compelled to keep full records of all their doings in the minute and account-books. That every matter shall have due attention they are compelled to bind themselves to a certain order and routine in what they do. Finally, they are required to keep their members informed officially by regular reports of all their transactions, and of the condition of the affairs of the association in full detail. Many members of associations, not having had ex- perience as directors, and not being close observers or very thoughtful about the matter, do not appreciate the amount and quality of service required. Indeed, 124 MANUAL FOR some are inclined to look upon the position as a sinecure, a place of honor, and to be sought after on that account. Although directors are put to all the inconvenience and labor indicated above, they have no more share in the benefits arising therefrom than have the other stockholders. It is argued that an association is a business enterprise. The men and women who com- pose the membership of the association do not work for their own employers except for wages. They do not give their own services without pay. On the other hand they are the employers of the directors of their associations. Should they require their own employes to serve without pay ? But if directors are to be paid it must be decided how much, and upon what basis. This is answered in a general way by saying that it must be only for ser- vices actually rendered. In the operations of an as- sociation each officer, each director, has an assignment of actual duties to perform, and if paid at all he should be paid in proportion to the amount, the character, and the responsibility of his work. In certain private corporations it has become the custom to pay each director a certain stated sum for each meeting he at- tends. When absent from a meeting he receives no pay. It is argued that the introduction of this system into the operations of a building association would have a good effect in two ways. First, it would secure the regular attendance of directors; second, it would secure better service from directors ; for, by regular attendance upon the meetings and participation in the business, each director will have a better understand- ing of all the plans and details, and hence, his services will be more valuable. BUILDING ASSOCIATIONS. 125 There are three things to consider in fixing the amount of remuneration, if it should be decided that directors shall be paid. The pay must be somewhat in proportion to the number of meetings, the amount of business transacted, and the number of directors. Three propositions have been made in this connection : (ij That each director be paid a stated sum for each meeting he attends ; (2) That the directors be paid a certain per cent, upon the amount of business trans- acted ; (3) That each director be paid a stated salary per year or per term of service. This opens up a large field for discussion which it would be inappropriate to attempt to occupy here. This one practical suggestion may be made, to wit : Let the number of directors be adapted to the actual needs in the transaction of the business of the association just as in an}' other business enterprise. Let the number of meetings also be ad- justed so as best to meet the requirements of the association. Then upon some basis let the directors be paid for actual services rendered. It will certainly happen that the agitation of this question will lead to the introduction of better business methods in the management of associations, and it may tend to lessen their number, to concentrate the business into fewer hands, to fix responsibility more closely, and possibly to the establishment of regular offices open during all business hours as well as on certain evenings for the transaction of business, the same as in banks or private corporations, and already in existence in some building associations. SALARY OF SECRETARY. What is said above does not apply to the salary of the secretary. The salary of this officer should not 126 MANUAL FOR BUILDING ASSOCIATIONS. be based upon the work done in the meetings. His duties, even in this respect, are very exacting. He must attend all meetings, keep the accounts of re- ceipts and disbursements, and also the minutes of the proceedings. But much the greater portion of his work is outside of the meetings, in posting his books, calculating dividends, and attending to the innumer- able details connected with his office. It is very essential that a secretary should be competent and faithful, and such a secretary should be liberally paid for his work. Few secretaries receive sufficient pay. CHAPTER XII. POWERS AND ^lABILITIES, GENERAL POWERS. A building association, being in the nature of a joint-stock corporation, possesses the general powers belonging to corporations of that class. These are usually laid down in the statutes of the different states about as follows : 1 . To have perpetual succession ; 2. To have a corporate seal ; 3. To make contracts and to hold real estate in a corporate capacity ; 4. To sue and to be sued ; and 5. To make rules for their own government. An association may not go beyond its statutory limitations and privileges and assume functions and prerogatives not granted in its charter. Such action would jeopardize the continuance of the charter itself and tend to render all acts of the association invalid. PERPETUAL SUCCESSION. The right of perpetual succession is essential to the purpose of the association, for, though the member- ship and the officers of the association may be changed (127) 128 MANUAL FOR more or less from time to time, the association itself must maintain an organic existence until it has com- pleted its course. Otherwise it would be impossible for such an organization to carry out its mission. While the association exists, it remains in the eye of the law an entity, notwithstanding any changes that may take place from time to time in its elements. THE CORPORATE SEAL. The seal of an association is the official stamp by which the papers executed as a part of its official busi- ness are to be identified and verified. The seal must be in the form of a stamp which will make an im- pression into wax or paper. Its custody and the manner of its use should be prescribed in the rules of the association. The affixing of the seal to an instru- ment should be accompanied by the official signatures of the president and the secretary. Some associations require the signature of other officers also. There has been much litigation in reference to the use of corpor- ate seals, and the rule has been established that "Wherever the law requires a natural person to attach a seal to the instrument executed by him, in like cases only would it be necessary for the corporation to ex- ecute a like instrument by a corporate seal." The mistake should not be made that an association is not liable for contracts that are not verified by its seal. On the contrary it is liable for all undertakings that are expressed or implied by its acts. It must not be understood that every association is required to possess a seal. The possession of a seal is essential only when required by the statutes or the BUILDING ASSOCIATIONS. 129 constitution of the association. As a matter of fact a large proportion of the associations in operation do not use seals. CONTRACTS AND AGENTS. An association may make contracts and purchases and sales directly through its corporate meeting. But, like other corporations, it usually acts through officers and agents, as heretofore explained in the discussion of the duties of officers. It is necessary that the rules provide fully for the proper execution of all contracts, that they designate the manner in which they are to be made, and the officers who are empowered to act for the association. When officers are once appointed with power to make contracts then the general laws relating to the subject of agency apply to associations, their agents, and third parties. Concerning appoint- ments of agents, it has been held that an agent may- act without written authority, or any authentication by the corporate seal of an association if a seal is used, provided his appointment is regular in other respects ; that any person, even a minor, may by due appoint- ment become an agent of an association ; and that, in certain cases, a member of an association as its agent may deal with himself or with himself as the agent of a third party, provided no special advantage is secured on either side through the arrangement. Since the appointment of the officers of an associa- tion is a matter of public record, third parties in deal- ing with them must satisfy themselves of their authority to act as agents. So long as agents of associations act within the limits of the authority con- ferred upon them the association is bound by their i 3 o MANUAL FOR acts. If an agent makes contracts in excess of his authority^ they may afterwards be ratified and ac- cepted by the association or its board of directors. In order to make his contracts in due form and binding, an agent must specify in the papers which he executes that the writing is done by the hand of an agent. Notice properly served upon an agent is a notice to the principal in the transactions for which he is employed. A notice conveyed through one director to the board at a regular meeting is a notice to the association. Or a notice conveyed to any director while engaged in the business of the association is a notice to the association, but is not a legal notice if given to him when he is not so engaged. A notice published in a newspaper is not a legal notice unless it relate to matters required to be so published. Private knowledge on the part of a director or officer, obtained from rumor or in any other accidental way, can not be regarded as an official notice to the associ- ation. A new board of directors is presumed to know all the facts and circumstances known by or com- municated to the previous board. An officer or agent of an association can not delegate his authority to another person, except where some special provision is made to that end. SUITS. As a necessary result of its power to make con- tracts an association has the right to enforce such contracts by suit if necessary. On the other hand, as a party to these contracts, the association itself is liable to legal process for the violation of any of its obligations. An association may bring suit against BUILDING ASSOCIATIONS. 131 individuals or corporations to enforce its legal and equitable rights ; and may in like manner bring suit against its own delinquent officers and members. On the other hand it is liable to be sued by outsiders or by its own officers and members for any actionable neglect or delinquency on its own part. No general rule can be given for the issuing of processes for and against building associations, since the requirements vary under the laws of the different states. These legal requirements must of course in all such cases be carefully observed. Such matters should be attended to by the attorneys of associations. To enter upon a general specification and discussion of the grounds upon which suits may be brought by or against associations would be an undertaking too elaborate for and foreign to the purpose of this work. These matters are well defined under the general and special legislation of the different states. RULES. Two general principles may be laid down concern- ing the adoption of rules for the government of an association. The first is that the rules must conform to the constitution and laws of the United States, and also of the state in which the association exists. And the second is that they must conform to the pur- poses for which the association is organized. Forms for constitution and by-laws are printed in the ap- pendix. SPECIAL POWERS. Associations, as a rule, in the different states are clothed with certain special powers. What these 132 MANUAL FOR powers may be for any particular association in any particular state must be learned from an examination of the statutes in that particular state and of the charter of that particular association. When the statutes are silent upon any particular power, neither permitting nor prohibiting it, or if doubt exists, the legal rights of an association in the premises may be determined by application to the attorney general, or by bringing action before the courts. Among the special powers which an association may or may not possess under the statutes and its charter, or indepen- dent of these, are the rights to borrow money, to ac- quire and to hold real estate, to build houses, etc. But some special powers are conferred upon asso- ciations generally, such as the authority to impose and collect fines. To determine the special powers of any association is a matter for legal inquiry, and in all cases should be referred to the proper legal authorities. DISSOLUTION. In the case of a terminating association it becomes dissolved as a matter of course at the expiration of the time for which it was incorporated and its charter granted, or when its stock matures. In some states the period of existence is fixed by the statutes. If the members of an association, or an essential portion of them should die, it would terminate its existence. If at any time the assets of an association become equal to the par value of all its stock it ceases to ex- ist, except so far as winding up its affairs is concerned. The members may, by unanimous agreement, sur- render the charter of an association and its franchises. BUILDING ASSOCIATIONS. 133 It has been held that, where there is no express pro- vision on the subject, a majority of the members may, by resolution, surrender the charter and dissolve the association. But they can not do this against the resistance of the minority. An association is * not dissolved by mere neglect or indifference on the part of the members which leads them to fail in the dis- charge of their duties. The insolvency of an association, or the refusal of members to keep up their stock-payments, or the omission to elect officers, does not work a dissolution of the association. Associations may be dissolved by act of the legislature or decree of court, where such dissolution does not impair the obligation of con- tracts. Such dissolution is usually brought about by the state itself, caused by the non-use or the mis-use of the franchises of the association. In all cases when the grant of the charter is found to have been defec- tive in any material part, or when it has been granted to persons imperfectly qualified to receive it, or upon improper representations, it is competent for the state to rescind its action and to dissolve the association. In case of the mismanagement of the affairs of an association, or where the system of operation is such as to involve losses, the courts may, upon proper ap- plication, appoint a receiver to take charge of its affairs and, if necessary, to wind it up. In the dis- solution of an association, or the winding up of its affairs, many questions of equity and of law are in- volved, which must be anticipated in the rules, or be submitted at the time of dissolution to proper judicial or legal authority. CHAPTER XIII. PRACTICAL QUESTIONS ANSWERED. EXPLANATORY NOTE. There are numerous questions which continually arise in reference to the practical workings of associations which require specific answers. A number of the more important of these are grouped together and answered in this chapter. In this same connection various practical suggestions are made which will be found of value in the transaction of the actual business of associations. BORROWING MONEY. Who may borrow? It is generally understood that none but members may borrow money from an asso- ciation. This is true, but it sometimes leads to a misunderstanding. While it is a fact that only mem- bers may borrow, it is also true that any person may become a member at any time with but trifling cost, and may immediately become a borrower. The con- stitution and by-laws of an association contain the terms and conditions upon which its money, is loaned, and are, in a sense, a portion of the contract or agree- ment between the borrower and the association. Hence the necessity of every borrower becoming a member and affixing his signature to the constitution and by-laws. With this understanding of the matter, (i34) MANUAL FOR BUILDING ASSOCIATIONS. 135 the answer may be given that anybody may borrow money from an association. For what purpose may money be borrowed? As in- dicated in a previous chapter,* many persons suppose that money can not be borrowed from a building asso- ciation except for building purposes. As there ex- plained, an association has nothing to do with the purpose for which money is borrowed. The sole duty of the association is to see that, in making the loan, it is protected by ample security. A member therefore may borrow money for any purpose whatever. What amount may be borrowed^ The financial transactions of an association with its members are always based upon shares. Shares are for different amounts, and members are allowed to own different numbers of shares in different associations. But the question may be answered in a general way by saying that a member may borrow the full amount of the paid-up value of the shares he holds, or any part thereof, provided the security he offers is satisfactory. Thus, if the shares of an association are $500 each, and a member is a subscriber for three shares, he may borrow $1,500 or any part thereof. But in order to avoid complications in accounts, most associations have the rule that money must be borrowed in even hundreds of dollars. What must be the character and amount of security f This is determined by the rules of associations. Generally, however, the security required is first mortgage on real estate in the county where the asso- ciation operates, or an assignment of the stock of the * See Chapter II. 136 MANUAL FOR association on which there has been paid in more than the amount of the loan. The rule is to make no loans on property already encumbered, no matter how valuable the property or small the encumbrance. But the money borrowed may be used to raise an encum- brance on the property offered as security. Some associations accept as collateral security, government and corporation bonds, first mortgage notes, etc. An association will usually loan money to the amount of about two-thirds of the value of the prop- erty offered as security. The value of the property is determined by an appraising committee, composed of members of the board of directors of the association. What is the cost of a loan ? The cost of a loan is made up of three items : the incidental expenses, the interest, and the premium. The incidental expenses consist of the fees for appraising property, attorney's fees for examining the title and preparing and record- ing the mortgage, traveling expenses if there should be any, and other such incidental matters. The rate of interest is fixed in the rules of the association, and is generally at so many cents per week or month on each share or part thereof loaned. The premium is the amount which the borrower bids when money is sold for the privilege of borrowing. The premium is in the form of so many cents per week on each share or part therof borrowed, in addition to the rate of in- terest fixed by the rules of the association. The pay- ment of one cent per week on $100 is equivalent to about one-half per cent, per annum interest. With this, as a basis, there will be but little difficulty in cal- culating the cost of a loan when interest and premium are combined. Some associations have a rule to the effect that BUILDING ASSOCIATIONS. 137 borrowers are not required to draw out the entire loan at first but may draw it in installments as needed, and that, in such cases, interest will be charged only from the time that the money is actually received. This arrangement is an especial convenience to persons who are building and who desire to make payments as the work progresses. It is also convenient to persons who have obligations to meet at stated periods as, for instance, notes in bank falling due at intervals. They can in this way use their money in installments with- out risk or waste. But the more general rule is that the full amount of interest and premium is charged up from the time the loan is made and the security is given, whether all the money is drawn out at that time or not, provided of course, that the money is on hand and ready to be paid to the borrower. How are loans repaid? As stated before, loans are based upon shares. A borrower must keep up his regular weekly (or monthly) payments of dues, and in addition to this, the regular weekly (or monthly) in- stallments of interest and premium as they fall due. We will suppose that a member has secured a loan of $1,000, that the regular dues are $1.00 per week on each share of $500, that the regular interest is 12 cents per week per $100, and that the premium which he agreed to pay is at the rate of 2 cents per week per $100. His regular weekly payments therefore would be : dues $2.00, interest $1.20, and premium 20 cents; total $3.40. If payments should be made monthly in- stead of weekly, there would, of course, be a propor- tionate increase. The amount to be paid regularly, however, will vary from time to time according to such arrangements as the borrower may make. In some associations he may pay more or less than the 138 MANUAL FOR regular amount of dues per week. He may prefer to pay interest and premiums in advance. When this rule holds, the amount he pays in goes to his credit upon his shares and begins to draw dividends, which are usually compounded semi-annually the same as are all other deposits. The greater the amount he pays in in installments the more quickly of course will his credits and dividends together amount to the $ 1,000 which is necessary to pay off his loan. How much time is required to pay up a loan ? This will depend upon four things : (r) the rate of interest; (2) the amount of the regular weekly (or monthly) payments ; (3) the amount of premium ; (4) the amount of dividends earned by the association. Where the rate of interest, amount of premium, and the earnings of an association are nearly uniform, then of course the length of time will depend simply upon the amount of the payments. TABLES: LOANS AND DEPOSITS. The following table shows how long a loan will run with various weekly payments on each $100 when the rate of interest is 12 cents per week on each $100, the premium is 2 cents per week on each $100, and the earnings of the association are 7 per cent, per annum. This has been prepared by Mr. A. A. Winters. Weekly payments ou each fioo. Time to run. 25 cents ii years 24 weeks. 30 40 50 60 70 80 90 100 6 .4 71 . 7 7Q 1 6 .2 ^6 2 18 . 2 <> BUILDING ASSOCIATIONS. TABLE Showing the course of a loan of $1,000. Premium at 20 cents per week. Interest at $1.20 per week. Seven per cent dividends compounded semi-annually. 139 1 1,000 00' Payments $130 00 1st Year. ' Interest and premium for year . Less dividends Net cost of loan ..|7280 ..200 70 80 Rate of Int. 7,5, Principal reduced 59 20 perct. fBal due beginning 1 of year $940 80 2d Year. 4 Payments Interest and premium for year . Less dividends Net cost of loan .' .' 72 80 .. 6 23 13000 66 57 Rate of Int. 7 8 ' leo Principal reduced 'Bal. due beginning of year Payments . ... 130 00 63 43 $877 37 per ct. * Interest and premium Less dividends .. 72 80 10 75 Rate of Int. Year. < Net cost of loan 62 05 7,3. 4th Ye"9r L Principal reduced 'Bal. due beginning of year. ... Payments Interest and premium for year . Less dividends . .' 72 80 . . 15 59 130 00 6795 $809 4T perct. Rate of Int. f *7 1 Net cost of loan 57 21 'l-oo 5th Principal reduced ' Bal. due beginning of year Payments Interest and premium for year. . Less dividends ; ; 72 so 20 7(> 130 00 7279. $736 63' perct. Rate of [ Int Year 1 Net cost of loan 52 04 'loo . Principal reduced fBal. due beginning of year ... $658 67] perct. 6th Payments Interest and premium for year . Less dividends '. '. 72 80 26 31 130 00 Rate of Int Year. ' Net cost of loan .. . . 46 44 ' 7 a 'loo L Principal reduced. . . 8351 per ct. 140 MANUAL FOR 7th Year. IBal. due beginning of year $575 16' Payments 13000 Interest and premium for year 72 80 Less dividends 32 26 Net cost of loan 40 51 Principal reduced 89 Rate of Int. 7.S. per ct. fBal. due beginning of year $485 70' Payments 13000 Interest and premium for year 72 80 Rate of 8th J Less dividends .. 3863 Int. Year. Net cost of loan 34 17 'loo Principal reduced 95 83. IBal. due beginning of year $389 87 Payments 130 00 Interest and premium for year 72 80 Rate of Less dividends 45 46 Int. 7 2 Net cost of loan 27 34 peVct. (. Principal reduced 10266 Bal. due beginning of year $287 21 Payments 130 00 Interest and premium for year 72 80 Rate of 10th Less dividends 52 77 Int. Year. 7 Net cost of loan 2003 perct Principal reduced 109 97. Bal. due beginning of year $177 24 Payments 13000 Interest and premium for year 72 80 Rate of llth Less dividends 6062 Int. Year. A 8 8 Netcostofloan 1218 u ioo perct. Principal reduced 117 82 Bal. due beginning of year $59 42" Payments 62 50 12th Interest and premium 35 00 Year. Less dividends 32 00 24 we'ks Netcostofloan 300 Principal reduced 59 50 j Time, 11 years and 24 weeks. Total amount of payments, $1,492.50. Total interest and premium, $835.80. Total dividends, $343.38. Net cost of loan, $492.42. BUILDING ASSOCIATIONS. 141 The following table shows the length of time required for a $500 share to mature when the dues are $1 per week, and the dividends at the rate of 7 per cent per annum : TIME. Amount paid in. Dividends on same. Value of Sharsseach half year. Value of Shares each year. 1st year. End of 26 weeks. " 52 " $26 00 52 00 $ 45 1 40 $26 45 $53 85 2d year. " 26 " " 52 " 78 00 104 00 2 34 3 36 82 19 111 55 3d year. " 26 " " 52 " 130 00 156 00 4 37 5 42 141 92 173 34 4th year. " 26 " " 52 " 182 00 208 00 6 54 7 66 205 88 239 54 5th year. " 26 " " 52 " 234 00 260 00 8 85 10 08 274 39 310 47 6th year. " 26 " " 52 " 28600 312 00 11 34 12 63 347 81 386 44 7th year. " 26 " " 52 " 338 00 364 00 14 00 15 40 426 44 467 84 8th year. " 26 390 00 16 83 510 67 $120 67 Total length of time, 7 years 6 months. " amount paid in as dues $390 00 41 " dividends at 7% per annum credited every six months 120 67 Total credits on share $510 67 142 MANUAL FOR The following table shows the length of time required for the payment of a loan of $500 (one share) when the dues are $1 per week, the dividends 8 per cent per annum, the premium 5 cents per week, and the interest 6 per cent per annum TIME. DUES. Divi- dends. Ain't due each year on which interest is paid. Interest. Pre- mium. TOTAL. Interest and Frem. 1st year $52 00 $2 1.6 Aa'tborrVd less dues and dividends. $500 00 54 16 $30 00 $2 60 $32 60 2d " 3d " 52 00 52 00 2 16 2 Ib ft 445 84 54 16 26 76 23 52 2 60 2 60 29 36 26 12 391 68 54 16 4th " 5th " 6th " 7th " 52 00 52 00 52 00 52 00 2 lb 2 16 - 2 16 2 16 i ( 337 52 54 16 20 28 16 98 13 74 10 50 2 60 2 60 2 60 2 60 22 88 19 58 16 34 13 10 283 36 54 16 229 20 54 16 175 04 54 16 8th " 9th " 52 00 52 00 2 16 2 16 " 120 88 54 16 7 26 4 02 2 60 2 60 9 86 6 62 66 72 54 16 12w'ks Totals 12 56 12 56 20 60 80 480 56 $19 44 H153 26 24 00 177 26 Total Dues, $480.56 " Dividends, 19.44 Total Interest, $153.26 " Premium, 24.00 " Credits. . .$500 00 Total cost of loan, $177.26 $500 at simple interest at 6% for 9 years and 12 weeks would cost . $277.50 BUILDING ASSOCIATIONS. 143 Advantag&s of a Building Association Loan. With many a person it is easy to pay off a loan in install- ments where it would be impossible to meet the entire indebtedness at once. Money borrowed from private persons or corporations is usually loaned on mortgage for one year. At the end of the year it must either be paid or a new loan must be negotiated which in- volves a repetition of all the original trouble, expense, and anxiety. The time when a note is coming due which is secured by a mortgage on one's home is not a pleasant day to which to look forward. It so often happens that the money which the borrower thought he would have saved up against the evil day is not forthcoming. Indeed, not infrequently the borrower finds difficulty in paying even the interest. In bor- rowing from a building association all this annual or periodical uneasiness is avoided. Each week or month takes care of itself, the burden is evenly dis- tributed, and one can readily regulate his habits and manner of life to conform to his necessities. Week by week the regular installments are paid, almost without feeling them, and the loan, which would be a terrible burden if it must be paid in one sum, is carried and ultimately paid off with ease. In borrowing from an association a member should make such arrangements for his payments as are not likely to become burdensome. It is better to arrange to make them as low as is consistent with safety. Then if, from time to time, the borrower finds that he can pay more than the agreed amount let him do so. And the amount thus paid in in advance will not only stand to his credit but, in many associations, will draw dividends in his favor. Moreover, 'by thus get- 144 MANUAL FOR ting some distance ahead with his payments, in case of sickness, loss of work, or some other misfortune, he may cease making payments for a time without falling into arrears or being in danger of losing his property. If a borrower unexpectedly finds himself able at any time to pay off all, or a considerable portion of his loan, it is better for him to do so. He not only relieves himself of an obligation by doing so and, in most cases, stops his interest, but he puts himself in such position that he may begin to accumulate money for himself which may be profitably invested in the association or in some other way. CONTINGENT OR RESERVE FUND. In the course of time in almost every association some losses will occur and some extra expenses will arise. If these should be taken as they occur in a lump out of the current earnings or receipts of the association, they would diminish the regular divi- dends for that period to such an extent as would create dissatisfaction among the stockholders. In order, therefore, to be prepared for emergencies of this character, the directors should from the beginning of the association, when the dividends are declared, set aside some portion of the profits for a reserve fund to meet any contingent expenses or losses which may arise. The proportion of profits to be set aside for a reserve fund should be left to the discretion of the directors to be decided at the regular semi- annual periods. It is not likely that occasions will often occur when it will be necessary to set aside more than one-tenth or one-eighth of the profits for BUILDING ASSOCIATIONS. 145 the contingent fund. This reserve fund should be held faithfully for the purpose for which it is estab- lished. No member should be allowed to have any claim upon it. But when a member's shares mature and he draws out his money, he is then entitled to withdraw his pro rata proportion from the reserve fund. Provision for a reserve fund is fixed by statute in some states. UNDIVIDED PROFITS. In the periodical apportionment of the profits of the association there is nearly always a little residue left over, from the fact that it is a very laborious undertaking to calculate and divide the gains down to a very small fractional part. The custom is to fix the dividend at such a rate as approximates closely to the gains of the association, but which may be expressed either by a whole number or a mixed number in which the fraction is of a convenient denomination to use in calculations. To illustrate: The actual gains of an association might be 7 fV* per cent. Assuming that YZ of one per cent, is placed to the credit .of the contingent fund, this would leave 7 T | per cent. To calculate the dividends of each member at this rate would put upon the secretary a large amount of very laborious figuring and involve no little liability to error. To avoid this the rate of the dividend would propably be fixed at 7 per cent. This leaves ^ \ of one per cent, of the profits for that term which are undivided. Also in the calculations there will be some small undivided profits. Some associa- tions pass these fractional portions of undivided pro- fits to the credit of the contingent fund ; others place 146 MANUAL FOR them in what is called the undivided profit account* When these are carried in the latter way the amounts left over from period to period should be added to the gains for each closing period before the dividends are declared. Where the undivided profits are passed to the credit of the contingent fund, they, of course, be- come liable to all the conditions covering that fund. MORTGAGES : CUSTODY, RECORDING, ETC. Mortgages should be placed upon the records of the county in which the mortgaged property is located. This should be done immediately after their execution in order to secure the proper priority of lien. One of the officers of the association (president, secretary, or treasurer) should be entrusted with this duty. It is advisable to provide this officer with a book contain- ing certificates of record to be signed by the recorder, clerk, or prothonotary, with whom the mortgage is left for recording. The blank for these certificates should be about as follows : Received for record 189. . at . . o'clock . . . t minutes . . M. from The Building and Loan Associa- tion, a mortgage given by to said associa- tion, dated 189. . of County, When a mortgage has been fully satisfied it should be discharged forthwith by a certificate of satisfaction by the president ; or president and secretary, as the rule may be, for entry upon the county records. If this certificate is indorsed upon the back of the mort- gage it may be in this form : BUILDING ASSOCIATIONS. 14? The foregoing and within mortgage has been fully paid and satisfied and the recorder (clerk, or prothonotary, as the case may be) is hereby authorized to cancel the same off of the records of County The Building and Loan Association, By , President, , Secretary. If the certificate of satisfaction is upon a separate sheet it must contain an accurate description of the mortgage designated for cancellation with the number of the mortgage book and the page where the same is recorded. The mortgages held by an association should not be left in the possession of any one of the officers, since this places a needless and irksome responsibility upon such officer, and since, in such custody, they might be liable to be lost or mislaid. They should be placed in the fire- proof safe of the association if it has one ; if it has none they ought to be deposited in the safe of some bank or in a safe-deposit vault, even if a small expense be incurred thereby. The mortgages as filed away should be properly arranged, either alphabetically according to the names of the mort- gagors, or in numerical order corresponding with the numbers of the members or shareholders executing them, so that any particular mortgage may be found readily. If a fire insurance policy is held as collateral to the mortgage, the policy should be filed with the mort- gage, a band or string holding the two papers to- gether or both being enclosed in an envelope. 148 MANUAL FOR INSURANCE POLICIES AS COLLATERAL SECURITY. In all cases where the value of the land mortgaged is not sufficient to secure the loan, and there are build- ings upon the land which are included in the mort- gage, fire-insurance policies on these buildings should be required. These policies should be assigned to the association. But in cases where the value of the land is evidently sufficient to cover the amount of the loan, including interest and costs of suit in case of a fore- closure, less the amount already paid in by the share- holder, it is not only unreasonable to require the assignment of a fire insurance policy but it also makes needless work for the officers of the association hav- ing charge of insurance matters. It should be made the duty of the secretary or of some other officer to keep a record of all the fire poli- cies held as collateral security. This record should in- clude the name and address of the company or of the agent issuing the policy and a sufficient description of the policy itself to make it easily recognizable. The record should be indexed with the names or numbers of the shareholders assigning the policies so that reference may be made to each readily. The record of policies should also be arranged in monthly groups showing when the policies expire. The month before the expiration of a policy the officer having charge of this matter should notify the mortgagor of the approaching expiration of his policy and request that it be renewed on or before the meet- ing day next preceding its expiration. At this meet- ing the certificate of entry of renewal duly signed by the agent or representative of the insurance company must be furnished to said officer of the association. BUILDING ASSOCIATIONS. 149 When an entry on the policy by the representative of the insurance company is required, the policy should be delivered to the mortgagor for that purpose to be returned at the meeting as before stated. If a borrower shall pay off a portion of his loan, reducing it to such an extent that the land covered by his mortgage independent of the buildings thereon is sufficient security for the loan, then his fire policy should be returned to him with the proper certificate of satisfaction and relinquishment either endorsed upon the policy itself or upon a special blank for that purpose. If endorsed upon the policy it may be in these words : 189-- The security for which this policy has been held by The Building and Loan Association is hereby relinquished. President, Secretary, The Building and Loan Association. When a special blank is used it must give the number and the date of the policy and the name of the insurance company issuing it, in addition to the words signifying relinquishment. If a loan is secured by mortgage on a terminating leasehold the policy of insurance should be held as collateral until the final satisfaction of the mortgage. Then the policy with the mortgage should be sur- rendered with the proper certificate of satisfaction as above. i5o MANUAL FOR LEASEHOLDS. When a leasehold is mortgaged to an association the secretary or other officer whose duty it may be should enter in a book kept for that purpose a copy of the forfeiture clause of the lease ; likewise the dates when ground rents become due, arranged in monthly groups as indicated above for the insurance policies. Receipts for the payment of the rental, taxes, and assessments, if any, should be presented, at the latest, at the meeting preceding the expiration of the term of forfeitures and the entry that such receipts have been produced should be made on the book of the proper officer. TAXES AND ASSESSMENTS. Mortgagors should be required, subject to penalties fixed by the rules, to present to the proper officers of the association their tax or assessment receipts at the farthest within one month after the last day when they were payable. An entry should be made in a book kept for that purpose to the effect that such a receipt was duly produced. PAYMENT OF DIVIDENDS. It is the practice in some associations for the mem- bers to draw out their dividends at the end of each :erm. This is probably a bad rule. Associations are organized for the purpose of enabling and encouraging their members to save money. If the members draw out their dividends regularly they are apt to expend this money which they might otherwise save. Unless a member absolutely needs his dividends it is better for him to allow them to stand to his credit. In asso- BUILDING ASSOCIATIONS. 151 ciations where the dividends are not drawn out they usually are compounded from term to term and thus assist materially in increasing a member's income. It is an advantage to the association also for the divi- dends to be left in the treasury. In an average asso- ciation doing a prosperous business, the semi-annual dividends will amount to a considerable sum which can be profitably loaned or invested by the association. But where the dividends are paid at the end of each term the directors must make special provision to have the money on hand with which to pay them. If dividends are not forthcoming when expected, sus- picions may arise and there may be a loss of confi- dence among the members. In paying dividends * it is convenient to have each member's money placed in an envelope beforehand so that on the meeting night it can be handed to him without any delay. The envelope may be printed about as follows : Book No ............ ............................................ Dividend of The ................. ............................... . ....... Building and Loan Association for term ending .............. Name Amount $ As these envelopes containing the dividends are distributed to the members each member should sign a receipt in the following form : * For methods of calculating dtridends and dividend tables see Chapter XVI. i5o MANUAL FOR LEASEHOLDS. When a leasehold is mortgaged to an association the secretary or other officer whose duty it may be should enter in a book kept for that purpose a copy of the forfeiture clause of the lease ; likewise the dates when ground rents become due, arranged in monthly groups as indicated above for the insurance policies. Receipts for the payment of the rental, taxes, and assessments, if any, should be presented, at the latest, at the meeting preceding the expiration of the term of forfeitures and the entry that such receipts have been produced should be made on the book of the proper officer. TAXES AND ASSESSMENTS. Mortgagors should be required, subject to penalties fixed by the rules, to present to the proper officers of the association their tax or assessment receipts at the farthest within one month after the last day when they were payable. An entry should be made in a book kept for that purpose to the effect that such a receipt was duly produced. PAYMENT OF DIVIDENDS. It is the practice in some associations for the mem- bers to draw out their dividends at the end of each :erm. This is probably a bad rule. Associations are organized for the purpose of enabling and encouraging their members to save money. If the members draw out their dividends regularly they are apt to expend this money which they might otherwise save. Unless a member absolutely needs his dividends it is better for him to allow them to stand to his credit. In asso- BUILDING ASSOCIATIONS. 151 ciations where the dividends are not drawn out they usually are compounded from term to term and thus assist materially in increasing a member's income. It is an advantage to the association also for the divi- dends to be left in the treasury. In an average asso- ciation doing a prosperous business, the semi-annual dividends will amount to a considerable sum which can be profitably loaned or invested by the association. But where the dividends are paid at the end of each term the directors must make special provision to have the money on hand with which to pay them. If dividends are not forthcoming when expected, sus- picions may arise and there may be a loss of confi- dence among the members. In paying dividends * it is convenient to have each member's money placed in an envelope beforehand so that on the meeting night it can be handed to him without any delay. The envelope may be printed about as follows : Book No Dividend of The.. Building and Loan Association for term ending 189... Name Amount $ As these envelopes containing the dividends are distributed to the members each member should sign a receipt in the following form : * For methods of calculating dtyidends and dividend tables see Chapter XVI. 152 MANUAL FOR 189- Received of The Building and Loan Association the sum of dollars in full for dividend for term ending Book No. These receipts may be loose, or bound in book form. If loose, after they have been signed, they should be filed either in the. numerical order of the members' pass-books, or in the alphabetical order of the members' names, so that they can be referred to readily. Some associations pay dividends by issuing war- rants upon the Treasurer who cashes them on presen- tation. These warrants are in the following form : No 189... Treasurer of The Building and Loan Association : Pay to the order of the sum of dollars, dividend in full for term ending 189 . . . Secretary. In some states the statutes, and in many associa- tions the rules, require that all moneys shall be deposited in bank and paid by check. BUILDING ASSOCIATIONS. 153 DUES, DEPOSIT SLIPS, ETC. At the appointed time for the payment of dues the tables should be cleared and conveniently arranged. The secretary and his assistants and the finance com- mittee should take proper position. The dues book should lie open in the most convenient place for use by the secretary or other person receiving the pay- ments, and for reference by his assistants and the members of the finance committee. Regular money boxes should be provided for assorting and depositing the money as received. It will greatly facilitate business if associations will use deposit slips or deposit envelopes. These are also of great advantage and convenience in checking up for any errors which may arise. PAYING OFF SHARES. Before the directors pay up shares in full or re- linquish mortgages, they should consider carefully the association's liabilities so that they may know 1 . What losses are liable to occur ; 2. What mortgages are likely to prove bad ; 3. What inside creditors the association has ; 4. Whether or not the existing reserve fund is sufficient to cover all such liabilities. Thus the directors may protect the association from any possible shortage. In case of withdrawal at any time when losses are pending, the shares with- drawn should be debited with their equitable propor- tion of the impending liability. If this is not made the rule knowing members, when the association may be under threatened temporary embarrassment, would withdraw their shares and escape without losses, while 154 MANUAL FOR the faithful and unsuspicious members remaining over would be compelled to meet the emergency. It must not be imagined that this prudence is un- necessary because of the fact that, generally speaking, building associations conducted on the permanent plan are prosperous and run along smoothly from year to year without embarrassment. Unexpected circumstances may arise in the affairs of an associa- tion just as in any other business enterprise. The officers, through inexperience or carelessness, may make mistakes. A neighboring association may de- clare large dividends. Then the officers think that their own association can do as well, and will increase their own dividends and pay out for profits more than the association has earned. Any increase in dividends has a very pleasing and quieting effect upon members. As a result the members themselves, under such cir- cumstances, become more careless, and, in consequence without any evil intent on the part of either officers or members, unexpected embarrassment may arise. It is well to anticipate all such emergencies before- hand, and thus to be prepared for them. It is easy to under-estimate an association's liabilities to borrow- ing members on the one hand, and to over-estimate the value of mortgages on advanced shares on the other. Another serious mistake which has often been made, principally in associations conducting their business on the gross plan, is to divide the profits at the end of the first term. If this is done a member coming in during the second term would afterwards have no share of certain profits to which in the course of time he would be justly entitled. In .some reports BUILDING ASSOCIATIONS. 155 unearned premiums and unearned interest will be found reckoned as assets. This is certainly a mistake since in each new term these assets must be reduced by the amount which must be placed to the credit or profits for that term. In some instances we have found reported as assets the entire outstanding re-payments having an unexpired term, without any reduction or discount being made for the time that must elapse before they shall be paid. 158 MANUAL FOR their own money that is invested in the business. They invest this according to their own judgment, and handle the business at their own discretion. In consequence they are naturally watchful and painstaking in all they do, their time and thought being devoted to the busi- ness. If the business prospers, well and good. But if they find that it is not prospering they may, without consulting any one, proceed to close it up. In the management of a building association the conditions are different. The directors and officers have some financial interest in it, but this interest is likely to be of min6r importance as compared with their other and outside individual interests, and it is also unimportant as compared with the aggregate interest of the association. The case is different in the management of any private individual enterprise, or of the business of any regular business firm or cor- poration. In a private enterprise the managers give to the business their whole time and thought. In the management of the business of a building association it is only incidentally that time and thought are given to it. l,et the officers of an association be ever so conscientious, ever so much interested, nevertheless the opportunities for error are greater in an associated than in a private enterprise. An association's business is open to many more risks of the mis-use or non-use of powers on the part of managers than is the case where proprietary interests are involved W *" 1/3 Int. : : : Dues. : . : j fl Fines. : : : d "*"* Prem. : : : 8*5 int. : : : 111 Dues. : : Fines. : : T 8 $ Prem. : : : w" ^2 d int. : : : Dues. : : : 8 & 1 Fines. : : So^ Prem. : ^H | lAdm.& : : . | Trans. : | Week : : ^ CO d i : : GRAND TOTAL. Fines. | J 3 Prem. 1 Int. Dues. Fines. | Prem. Int. Dues. Fines. Prem. Int. Dues. ~Fines. ===== Prem. Int. Dues. ^ines Prem. Int. Dues. Fines. Prem. Int. == Dues. Fines. Prem. Int. Dues. 186 MANUAL FOR IONTHLY SECRETARY'S BOOK. This diagram shows a form for rulings, entries, footings, and postings, for what is called 1 2-month Contribution Book. In this form dues are paid monthly instead of weekly, and at le end of the year are footed -across in each account and then posted. Fines. : : : Prem. Int. Dues. Fines. : : : Prem. Int. Dues. Fines. | : : : Prem. Int. Dues. Fines. : : : Prem. Int. Dues. Fines. 1 : : : Prem. Int. Dues. Fines. Prem. Int. Dues. NAME. || Book |Adm.& | Trans. || Shares : : \ 1 GRAND TOTAL. 1 : : : Fines. t-3 tj Prem. 1 Int. Dues. Fines. Prem. Int. Dues. Fines. Prem. Int. Dues. Fines. Prem. Int. Dues. Fines Prem. Int. Dues. Fines. Prem. Int. Dues. Fines. Prem. Int. Dues. BUILDING ASSOCIATIONS. 187 SECRETARY'S CASH BOOK. An association must have some way of bringing all its accounts together, so that they may be properly summarized and balanced. This is done through the Cash Book, sometimes called the Itemized Cash Book, or Secretary's Cash Book. The rule of debit what you receive and credit what you pay out, holds good with cash only ; whereas in all other transactions the reverse is true. The bulk receipts are entered in their respective columns of the Cash Book, debiting cash, while the disbursements are entered in their respective columns, crediting cash. The method of checking the Cash Book is illus- trated in the diagram on the following page. TREASURER'S CASH BOOK. The treasurer keeps this book for his own con- venience. In it he enters the gross receipts of each meeting and all disbursements. If kept posted prop- erly it shows at all times the exact amount of cash on hand. This book should be checked against the Treasurer's Receipt Book, the Warrant Book, and the Bank Book, an appropriate check sign being placed opposite the last entries in each. MEMBERS' LEDGER. In checking this book attention must be given to the following points : i. The account of each shareholder in the Ledger must be checked by comparison with the entries in his Pass Book. A sign indicating that this has been done should be placed against the Ledger entries, and also opposite the last Pass Book entry. i88 MANUAL FOR DIAGRAM CASH. B UILDING ASSOCIA TIONS. 189 2. Items posted from the Contribution Book should be checked by amount, date, and folio, and another appropriate check sign should be placed against the last entries. 3. Withdrawal items should be checked against the Members' Pass Book, Contribution Book, am 1 Warrant Book. 4. The Dividend account must be examined to se< that all dividends due to each member have bee.i properly credited, and, if drawn, the items must be checked against the Warrant Book. 5. All miscellaneous items, such as assessments, rebates, and every thing of that character, must be checked carefully against original entries. WITHDRAWALS. Auditors should see that the files contain properly signed vouchers from withdrawing members, showing the exact amount which has been received. The sig- natures to these vouchers should be compared with those entered in the Constitution Signature Book, if such a Book is kept ; if not, he must verify the sig- nature to his own satisfaction in some other way. In checking up withdrawals, he should note, 1 . That applications for money have been entered in the Withdrawal Book in regular chronological order and that they have been acted upon in this order 1 the Directors. 2. That all warrants for the payment of with drawals correspond with the dates and amounts in Cash Book. 3. That partial withdrawals are properly noted in the Member's Pass Book ; and, if the withdrawal is 190 MANUAL FOR complete and absolute, that the Pass Book has been surrendered, and the fact of withdrawal entered therein. 4. That amounts paid out on withdrawal have been charged against their proper accounts in the Members' Ledger. GENERAL LEDGER. This is a very important book in connection with the accounts of the association. In it are summarized the details of all the other books. By it the correct- ness of all the other accounts is to be finally tested. From it the Balance Sheet is made up. It tests the actual condition of the association's business, indicat- ing the assets and the liabilities, the profits and the losses. As implied in its name, the accounts of this Ledger are the opposite of the individual accounts in the Members' Ledger. Herein is applied the double entry principle in book-keeping. Every debit must have a credit, and vice versa. The old system of journalizing is now generally discarded, since it involves a great deal of unnecessary labor. Under the later methods each item is entered immediately to its appropriate account, or is posted from the books of original entry, without passing through the Journal. Building association accounts differ from mercan- tile accounts in that the transactions are wholly finan- cial, and are uniform. This makes possible more simple methods of book-keeping in certain respects, though the accounts are very intricate on account of the character and multiplicity of the items. But the same principle of debit and credit must still lie at the foundation of the system, and the ultimate result of BUILDING ASSOCIATIONS. 191 book-keeping must show the total assets and liabilities, and the profits and losses correctly. If the summarized items under these heads fail to balance, then there is something wrong with the accounts. The general accounts necessary usually are the following, and as a rule they will appear in the Trial Balance as indicated : (Usually CR.) Usually DR.) PASS BOOKS, EXPENSE, DUES, SALARIES, FINES, RENTS, PREMIUMS, INSURANCE, INTEREST, DIVIDENDS, ADMISSIONS, SHORTAGES, TRANSFERS, INTEREST. OVERS, RENTS, DIVIDENDS, SURPLUS. ASSETS AND LIABILITIES. The assets and liabilities may have some such classification as follows : ASSETS. LIABILITIES. Cash on hand, Running stock and dividends, Loans on mortgage security, Paid-up stock and dividends, Loans on stock security, Deposits and interest, Furniture and fixtures, Fund for contingent losses, Real estate, Borrowed money, Due for insurance and taxes, Undivided profits, Other assets, in detail. Other liabilities, in detail. The schedule must be sufficiently comprehensive in its details to include every thing, and the audit must be so conducted as to trace every item into this schedule so that each summary may be fully verified. i 9 2 MANUAL FOR The amount by which the assets may exceed the liabilities is usually called the Reserve Fund. The amount by which the liabilities may exceed the assets is usually called Shortage or Deficiency. AUDITOR'S REPORT ON SPECIAL MATTERS. Where every thing is found correct and in good form the auditor's regular certificate is usually about all that he need file in the way of a report. In some cases, although he may sign the regular certificate, there may be some matters to which he may deem it necessary to call the attention of the shareholders. In deciding as to whether or not he should make any report on such special matters, or should make any incidental suggestions, he must be guided by what may seem to him to be necessary for the welfare of the association. A few illustrations may be suggestive: The auditor may differ with the secretary or the directors upon some matter which may be of import- ance to the interests of the association. If so, he should state the matter plainly so that it may be clearly understood, being careful, however, not to be too elaborate and therefore tedious, and should give illustrations when possible. He might find that the secretary or other officer was underpaid or overworked, and might think it better for the association if this were corrected. He might discover that the officers were not afforded proper facilities for transacting the associa- tion's business and that its interests were in con- sequence crippled or jeopardized, and could make some recommendation. He might find that the system for filing and caring BUILDING ASSOCIATIONS. 193 for mortgages, insurance policies, notes, and other papers, was not a good or safe one. Many other such incidental matters might claim his attention. In making special reports on any miscellaneous matters an auditor should act deliberately. He should be careful not to do any thing which might be used to the disadvantage of the association or its officers by some disgruntled or unwise member, or some officious or antagonistic outsider. In any case where he finds that the accounts and records are grossly inaccurate and incomplete, either through carelessness, incompetency, or a purpose to deceive on the part. of the officers, his duty is plain. He must not only withhold his certificate but must report facts as he finds them to the association. AUDITOR'S CERTIFICATE. When the Auditor has completed his task, if he has found every thing correct, he should prepare and sign a certificate in some such form as follows : To THE SHAREHOLDERS OF THE BUILDING AND LOAN COMPANY. I have carefully examined the books, vouchers, cash, and accounts of your Association, and find the same to cor- respond with the Balance Sheet as presented under date of I also find the present condition of the Association to be correctly presented in said Balance Sheet. Respectfully, ., Auditor. 194 MANUAL FOR SAFETY INSURED. The suggestions here made are sufficient to put an inexperienced auditor on his guard, and also to indicate to members something of what is involved in an audit, and to show the character of person that should be appointed as auditor. If auditing were always faithful and efficient it would save much trouble, anxiety, and loss to mem- bers. Even if the account is correct, or if there are unintentional errors in it, it is only regular and com- petent auditing that will insure permanent confidence in the association on the part of members and of the public. There always are apt to be a few members at least, and not a few outsiders, who look upon an asso- ciation with more or less distrust. If such as these see that the affairs of an association are regularly and systematically investigated, then their confidence sooner or later becomes established. Under such a system officials would soon learn that it was impossible to secure the auditor's certificate to unreliable and incorrect accounts and statements, and shareholders would understand that the practice of any fraud upon them would be impossible. By the adoption of some such system of auditing as is here presented, shareholders make such provisions and take such precautions as will render mistakes well-nigh impossible. They have delegated authority to two representative bodies, each of which acts as a check upon the other. The board of directors is an administrative body ; the auditor or auditors constitute a supervising and reviewing department. The directors and secretary are compelled to be watchful, for they know all their work will be under critical review. BUILDING ASSOCIATIONS. 195 The auditor must prove himself competent and do Ms work faithfully, or his inefficiency will be apparent in the course of time. STATE SUPERVISION. So many citizens are entrusting their earnings to the care of building associations, and the aggregate capital they accumulate has become so large, that some form of civil supervision has become a necessity. Some extreme theorists have even argued that this is a subject for national control, and point to the national banks as presenting a system somewhat analogous to that of the associations. But at the present time, at any rate, it is useless to speak of federal supervision of building associations. If they come under any kind of govermental supervision at all, it must be from the various states. Some states have already provided for the super- vision of associations. The "Co-operative Savings Fund and L,oan Associations" of Massachusetts are supervised under the most stringent laws. In Ohio, the Insurance Commisioner has been made Supervisor of Building Associations, and the subject is assigned to a separate bureau in his department under the care of a special deputy. In Minnesota, and a number of other states, building association bureaus have been estab- lished as departments in the offices of the commis- sioners of banking, insurance, etc. Owing to the formative character of legislation on this subject it is not possible to present a comprehensive summary at this time. It seems safe to say that the day is not far distant when separate departments of building associa- tion inspection must be established in all those states where these societies are now so rapidly multiplying. 196 MANUAL FOR BUILDING ASSOCIATIONS. But state supervision, so far as it has yet been developed, does not remove the necessity for private auditing. Indeed, it enforces this necessity, and this is its object. The state supervisor does not take the place of the regular auditor. He makes no actual inspection of the accounts and affairs of an association except in emergencies. The time may come, as per- haps it ought, when it will be made the duty of the state officials to make personal examination of the business of associations, not alone at regular stated periods, but at irregular and unexpected times. When this shall come to pass we may expect to see the end of such careless and unbusiness-like methods as are now sometimes witnessed, and to hear no more of shortages and defalcations. CHAPTER XVI. DIVIDEND AND INTEREST TABLES. CALCULATION OF DIVIDENDS AND INTEREST. There is great necessity for the utmost care in the calculation and declaration of dividends. It has hap- pened in experience that associations have become greatly embarrassed on account of carelessness or in- competency in this connection. A secretary, too anxious to make a good showing for his association, may become a little too liberal in his estimate of profits. Directors, being sometimes careless in the discharge of their duties, accept the secretary's esti- mate and declare dividends accordingly. The associ- ation runs along smoothly enough for two or three terms, and then unexpectedly begins to find itself embarrassed. Investigation shows that this has resulted from the over-estimate of profits, and the declaration of too liberal dividends. If such a mistake is discovered early enough it may not be serious in its consequences. It will only be necessary to run a term or two without dividends, or with greatly reduced dividends, until the association recovers itself. But such a situation is awkward, to say the least, and prejudicial to the good name of the association and its officers. Therefore such an error should be guarded against most carefully. (197) 198 MANUAL FOR The calculation of dividends and interest generally constitutes a heavy task for the secretary. It is un- fortunate that there is not more uniformity in the methods followed by different associations. If divi- dends were always declared according to the same plan, and interest were always calculated upon the same basis, it would be easy to arrange uniform systems which all officers could follow. This would not only greatly decrease the amount of labor in this connection, but would obviate the constant liability to error in making numerous intricate calculations. A large number of dividend and interest tables have been prepared. Several of these tables, which are in more general use and have given good satis- faction, are printed herewith. They will be very valuable for use in those associations following the same plans upon which the tables are based. They will be valuable for reference to officers and members of all associations. APPLICATION OF PROFITS. The profits of an association should be applied as follows : 1. To the payment of the expenses. 2. Such portions as may be determined semi- annually or annually by the board of directors should be set aside as a reserve fund for the payment of con- tingent losses. 3. The residue should be apportioned among the members in proportion to their average investments. ILLUSTRATION. The following figures are taken from the books ot a small association that had been running for one year : BUILDING ASSOCIATIONS. 199 Dues withdrawn of Ist-half year's dues .............. $2,393.00 " O f2d " " ............. 1,330.00 At end of first half year ..... $5,678.00=Dues account. Withdrawn of 1st K year's dues .................. 2,393.00 Balance ................ $3,285.00 Am't in for full At end of 2d half year : Dues paid in for the current term .... $7,433.00* Withdrawn during 2dhalf year ..... 1,330.00 Balance ....... $6,103.00 Which divided by 2 for average, equals ........ $3,051.50 Av f^uii year. Full amount on which divi- dends are to be declared. The profits of the association from which the aforesaid abstract was made, had been $250.07 ; one per cent, of the full amount on which dividends are to be declared equals $63.36, which divided into $250.07 indicates that the associa- tion may declare a 4 per cent, semi-annual dividend. This being calculated and distributed among the members amounted to $224.80. Profits, $250.07, less dividends, $224.80, leaves balance, $25.27, which is transferred to the Reserve Fund. In order that a secretary can get at this method of finding the principal the following form will be found useful : Balance on last half year. Withdrawn during cur- rent half year. Paid during current half year. Withdrawn of dues paid during half year. Balance ji ? ^5 Am't of Divi. * The proper method is first to average dues paid in and then to deduct dues withdrawn. MANUAL FOR SYSTEM I. TABLES. The following tables and explanation are furnished by Mr. W. L. Davis and verified by Mr. Chas. H. Stewart. EXPLANATION. Example of the First Semi-annual Dividend : A has one share, $1.00 weekly dues. He has paid for six months, or twenty-six weeks. The dividend declared is eight per cent, (semi-annual). What is A's portion? Turn to the 8 per cent, tables (page 207). Opposite 26, the number of weeks A has paid $1.00, you find $1.08, which is the amount of $26.00 at 8 per cent, for twenty-six weeks upon the usual computation of averages, or, in other words, the proportion of dividend declared which is due A. Example of the second and all subsequent dividends: B has three shares (of $1.00 per share dues). He has paid $402.00. The dividend declared is five per cent, (semi- annual . ) What is B ' s portion ? Subtract from $402.00, the amount he has paid since the last dividend, $3.00 per night for twenty-six weeks, or $78.00. Find 5 per cent, of the difference, $324.00 ; which is $16.20, or dividend upon $324.00. Now turn to the five per cent, tables (page 204). Opposite 26, the number of weeks B has paid $3.00 since the last settlement, you find $2.025 in the three-share column, which is the amount of dividend on $78.00 ; now add $2.025 to $16.20. The result, $18.225, is the amount of dividend due B on $402.00. BUILDING ASSOCIATIONS. 201 Shares, $500. Dues, $1.00 per week. TWO PER CENT TABLES. No. ONE TWO THREE FOUR FlVB WEEKS SHAKE SHARES SHARES SHARES SHARES 1 2 .012 3 .010 .013 .020 .023 4 .015 .023 .030 .040 5 .011 .023 .035 .046 .060 6 .016 .032 .048 .065 .081 7 .021 .043 .065 .086 .110 8 .027 .055 .083 .110 .140 9 .034 .069 .104 .138 .173 10 .042 .084 .128 .169 .212 11 .050 .101 .148 .203 .254 12 .060 .120 .180 .240 .300 13 .070 .140 .210 .280 .350 14 .080 .161 .242 .323 .404 15 .092 .185 .277 .370 .462 16 .104 .209 .314 .420 .523 17 .117 .235 .353 .470 .590 18 .131 .263 .395 .526 .660 19 .146 .292 .438 .585 .731 20 .161 .323 .485 .646 .810 21 .177 .355 .533 .710 .890 22 .194 .390 .584 .780 .973 23 .212 .424 .636 .850 1.061 24 .230 .461 .692 .923 1.154 25 .250 .500 .750 1.000 1.250 26 .270 .540 .810 1.080 1.350 202 MANUAL FOR Shares, $500. Dues, $1.00 per week. THREE PER CENT TABLES. No. ONE Two THREE FOUR FIVE WEEKS SHARE SHARES SHARES SHARES SHAKES 1 2 .011 .014 .020 3 .014 .020 .027 .034 4 .011 .023 .034 .045 .057 5 .017 .035 .052 .070 .087 6 .024 .048 .073 .097 .121 7 .032 .065 .097 .130 .162 8 .041 .t)83 .124 .165 .207 9 .051 .104 .155 .207 .259 10 .063 .127 .192 .254 .318 11 .076 .152 .222 .305 .381 12 .090 .180 .270 .360 .450 13 .105 .210 .315 .420 .525 14 .121 .242 .364 .485 .606 15 .138 .277 .415 .554 .693 16 .157 .314 .470 .627 .784 17 .176 .353 .529 .705 .882 18 .197 .395 .592 .790 .987 19 .219 .438 .658 .877 1.096 20 .242 .485 .727 .970 1.212 21 .266 .533 .799 1.065 1.332 22 .292 .584 .875 1.167 1.459 23 .318 .636 .955 1.273 1.591 24 .345 .692 1.040 1.385 1.721 25 .375 .750 1.125 1.500 1.875 26 .410 .810 1.215 1.620 2.025 BUILDING ASSOCIATIONS. 203 Shares, $600. Dues, $1.00 per week. FOUR PER CENT TABLES. No. WEEKS ONE SHARE Two SHARES THREE SHARES FOUR SHARES FIVE SHARES 1 2 .010 .014 .020 .024 3 .018 .027 .037 .046 4 .015 .031 .045 .061 .076 5 .023 .046 .069 .093 .116 6 .032 .065 .097 .130 .162 . 7 .043 .086 .129 .173 .216 8 .055 .110 .165 .221 .276 9 .069 .140 .207 .277 .346 10 .085 .169 .255 .340 .424 11 .101 .203 .305 .406 .510 12 .120 .240 .360 .480 .600 13 .122 .280 .420 .560 .700 14 .161 .323 .485 .646 .810 15 .185 .370 .554 .740 .924 16 .209 .420 .627 .837 1.046 17 .235 .470 .705 .940 1.176 18 .263 .526 .790 1.053 1.316 19 .292 .585 .877 1.170 1.462 20 .323 .646 .970 1.293 1.616 21 .355 .710 1.065 1.421 1.776 22 .389 .780 1.167 1.557 1.946 23 .424 .850 1.273 1.697 2.122 24 .460 .923 1.384 1.846 2.310 25 .500 1.000 1.500 2.000 2.500 26 .540 1.080 1.620 2.160 2.700 204 MANUAL FOR Shares, $500. Dues, $1.00 per week. FIVE PER CENT TABLES. No. ONE Two THREE FOUR FIVE WEEKS SHARE SHARES SHARES SHARES SHARER 1 .010 2 .012 .020 .024 .030 3 .011 .023 .034 .046 .057 4 .020 .039 .057 .076 .095 5 .029 .058 .087 .116 .145 6 .040 .081 .121 .162 .202 7 .054 .108 .162 .215 .270 8 .069 .140 .207 .276 .345 9 .086 .173 .260 .346 .432 10 .106 .212 .320 .424 .530 11 .127 .254 .381 .510 .635 12 .150 .300 .450 .600 .750 13 .175 .350 .525 .700 .875 U .202 .404 .606 .810 1.010 15 .231 .462 .693 .924 1.155 16 .261 .523 .784 1.046 1.307 17 .294 .590 .882 1.176 1.470 IS .329 .660 .987 1.316 1.645 19 .365 .731 1.096 1.462 1.827 20 .404 .810 1.212 1.616 2.020 21 .444 .890 1.332 1.776 2.220 22 .486 .973 1.460 1.946 2.432 23 .530 1.061 1.591 2.122 2.652 24 .577 1.154 1.731 2.310 2.885 25 .625 1.250 1.875 2.500 3.125 26 .675 1.350 2.025 2.700 3.375 BUILDING ASSOCIATIONS. 205 Shares, $500. Dues, $1.00 per week. SIX PER CENT TABLES. No. ONE Two THREE FOUR FIVE WEEKS SHARE SHARES SHARES SHARES SHARES 1 .012 2 .014 .021 .030 .036 3 .014 .028 .041 .055 .070 4 .023 .047 .068 .091 .114 5 .035 .065 .104 .140 .174 6 .048 .097 .146 .194 .243 7 .065 .129 .194 .260 .324 8 .083 .165 .248 .331 .414 9 .104 .207 .311 .415 .520 10 .127 .254 .383 .510 .636 11 .152 .305 .457 .610 .762 12 .180 .360 .540 .720 .900 13 .210 .420 .630 .840 1.050 14 .242 .485 .727 .970 1.212 15 .277 .554 .830 1.110 1.386 16 .314 .627 .941 1.255 1.570 17 .353 .705 1.058 1.411 1.764 18 .395 .789 1.184 1.580 1.974 19 .438 .877 1.316 1.754 2.193 20 .485 .970 1.454 1.940 2.424 21 .533 1.065 1.598 2.131 2.664 22 .584 1.167 1.800 2.335 2.920 23 .636 1.273 1.910 2.546 3.183 24 .692 1.385 2.077 2.770 3.462 25 .750 1.500 2.250 3.000 3.750 26 .810 1.620 2.430 3.240 4.050 20 6 MANUAL FOR Shares, $500. Dues, $1.00 per week. SEVEN PER CENT TABLES. No. ONE Two THREE FOUR FIVE WEEKS SHAKE SHARES SHARES SHARES SHARES 1 .010 .011 .014 2 .017 .025 .033 .042 3 .016 ..032 .048 .064 .080 4 .026 .054 .080 .106 .133 5 .040 .081 .122 .162 .203 6 .056 .113 .170 .227 .283 7 .075 .151 .227 .302 .380 8 .096 .193 .289 .386 .483 9 .121 .242 .363 .484 .605 10 .148 .297 .447 .593 .742 11 .178 .355 .533 .711 .890 12 .210 .420 .630 .840 1.050 13 .245 .490 .735 .960 1.225 14 .283 .565 .850 1.151 1.414 15 .323 .647 .970 1.293 1.617 16 .366 .732 1.098 1.464 1.830 17 .411 .823 1.235 1.646 2.060 18 .460 .921 1.381 1.842 2.303 19 .512 1.023 1.535 2.047 2.560 20 .565 1.131 1.697 2.262 2.830 21 .621 1.243 1.864 2.486 3.110 22 .681 1.362 2.043 2.724 3.405 23 .736 1.485 2.230 2.971 3.713 24 .808 1.615 2.423 3.231 4.040 25 .875 1.750 2.625 3.500 4.375 26 .945 1.890 2.835 3.780 4.725 BUILDING ASSOCIATIONS. 207 Shares, $600. Dues, $1.00 per week. EIGHT PER CENT TABLES. No. WEEKS ONE SHARE Two SHARES THREE SHARES FOUR SHARES FlVB SHARKS 1 .010 .013 . .016 2 .020 .029 .040 .050 3 .018 .037 .055 .073 .092 4 .030 .062 .091 .121 .152 5 .046 .093 .140 .185 .232 6 .065 .129 .194 .260 .324 7 .086 .173 .260 .345 .432 8 .110 .221 .331 .441 .552 9 .138 .277 .415 .553 .692 10 .169 .340 .511 .680 .850 11 .203 .406 .610 .813 1.016 12 .240 .480 .720 .960 1.200 13 .280 .560 .840 1.120 1.400 14 .323 .646 .970 1.293 1.616 15 .369 .740 1.108 1.478 1.850 16 .418 .837 1.255 1.673 2.092 17 .470 .941 1.411 1.881 2.352 18 .526 1.053 1.580 2.105 2.632 19 .585 1.170 1.754 2.340 2.924 20 .646 1.293 1.940 2.585 3.232 21 .710 1.421 2.131 2.841 3.552 22 .778 1.557 2.335 3.113 3.892 23 .856 1.697 2.546 3.395 4.244 24 .923 1.846 2.770 3.693 4.616 25 1.000 2.000 3.000 4.000 5.000 - 26 1.080 2.160 3.240 4.320 5.400 208 MANUAL FOR Shares, $500. Dues, $1.00 per week. NINE PER CENT TABLES. No. ONE TWO THREE FOUR FIVE WEEKS SHARE SHARES SHARES SHARES SHARES 1 .010 .014 .020 2 .010 .021 .032 .043 .054 3 .020 .041 .062 .083 .103 4 .034 .070 .102 .137 .171 5 .052 .104 .156 .209 .261 6 .073 .146 .218 .291 .364 7 .097 .194 .291 .389 .486 8 .124 .248 .372 ,497 .621 9 .155 .311 .467 .623 .780 10 .191 .381 .575 .763 .954 11 .228 .457 .686 .914 1.143 12 .270 .540 .810 1.080 1.350 13 .315 .630 .945 1.260 1.575 U .363 .727 1.090 1.454 1.820 15 .416 .831 1.247 1.663 2.080 16 .471 .941 1.412 1.883 2.353 17 .529 1.060 1.587 2.117 2.646 18 .592 .184 1.776 2.370 2.961 19 .658 .316 1.973 2.631 3.290 20 .727 .454 2.181 2.909 3.636 21 .799 .600 2.397 3.197 3.996 22 .876 .751 2.627 3.503 4.380 23 .955 .910 2.864 3.820 4.770 24 1.038 2.077 3.116 4.154 5.193 25 1.125 2.250 3.375 4.500 5.625 26 1.215 2.430 3.645 4.860 6.075 BUILDING ASSOCIATIONS. 209 Shares, $500. Dues, $1.00 per week. TEN PER CENT TABLES. No. ONE Two THREE FOUR FIVE WEEKS SHARE SHARES SHARES SHARES SHARES 1 .010 .012 .016 .020 2 .012 .024 .036 .050 .060 3 .023 .046 .070 .092 .115 4 .040 .078 .114 .152 .190 5 .060 .116 .174 .232 .290 6 .081 .162 .243 .324 .405 7 .108 .216 .324 .432 .540 8 .138 .276 .414 .552 .690 9 .173 .346 .520 .692 .865 10 .212 .424 .640 .850 1.060 11 .254 .510 .762 1.016 1.270 12 .300 .600 .900 1.200 1.500 13 .350 .700 1.050 1.400 1.750 14 .404 .810 1.212 1.616 2.020 15 .462 .924 1.386 1.850 2.310 16 .523 1.046 1.569 2.092 2.615 17 .590 1.176 1.764 2.352 2.940 18 .660 1.316 1.974 2.632 3.290 19 .731 1.462 2.193 2.924 3.655 20 .810 1.616 2.424 3.232 4.040 21 .890 1.776 2.664 3.552 4.440 22 .973 1.946 2.919 3.892 4.865 23 1.061 2.122 3.183 4.244 5.305 24 1.154 2.308 3.462 4.616 5.770 25 1.250 2.500 3.750 5.000 6.250 26 1.350 2.700 4.050 5.400 6.750 , 210 MANUAL FOR Shares, $500. Dues, $1.00 per week. . ELEVEN PER CENT TABLES. No. ONE Two THREE FOUR FIVE WEEKS SHARE SHARES SHARES SHARES SHARES 1 .010 .013 .020 .022 2 .013 .026 .040 .053 .066 3 .025 .050 .076 .101 .126 I .042 .086 .125 .167 .210 5 .064 .127 .191 .255 .320 6 .089 .178 .267 .356 .445 7 .119 .237 .356 .475 .594 8 .152 .303 .455 .607 .760 9 .190 .380 .571 .761 .951 10 .233 .466 .703 .933 1.166 11 .279 .560 .840 1.117 1.397 12 .330 .660 .990 1.320 1.650 13 .385 .770 1.155 1.540 1.925 U .444 .890 1.333 1.777 2.222 15 .510 1.016 1.524 2.033 2.541 16 .575 1.150 1.726 2.301 2.876 17 .647 1.293 1.940 2.587 3.234 18 .724 1.447 2.171 2.895 3.620 19 .804 1.610 2.412 3.216 4.020 20 .889 1.777 2.666 3.555 4.444 21 .977 1.953 2.930 3.907 4.884 22 1.070 2.140 3.211 4.281 5.351 23 1.167 2.334 3.501 4.670 5.835 24 1.266 2.540 3.810 5.077 6.347 25 1.375 2.750 4.125 5.500 6.875 26 1.485 2.970 4.455 5.940 7.425 BUILDING ASSOCIATIONS. 211 Shares, $500. Dues, $1.00 per week. TWELVE PER CENT TABLES. No. WEEKS ONE SHARE Two SHARES THREE SHARES FOUR SHARES FIVE SHARES 1 .010 .014 .020 .024 2 .014 .030 .043 .057 .072 3 .027 .055 .083 .110 .140 4 .045 .093 .137 .182 .230 5 .070 .139 .209 .278 .350 6 .097 .194 .291 .389 .486 7 .130 .260 .389 .520 .650 8 .165 .331 .497 .662 .830 9 .207 .415 .623 .830 1.040 10 .254 .510 .767 1.017 1.272 11 .305 .609 .914 1.220 1.524 12 .360 .720 1.080 1.440 1.800 13 .420 .840 1.260 1.680 2.100 14 .485 .970 1.454 1.940 2.424 15 .554 1.110 1.663 2.217 2.772 16 .627 1.255 1.883 2.510 3.140 17 .705 1.411 2.117 2.822 3.530 18 .790 1.580 2.369 3.160 3.950 19 .877 1.756 2.631 3.510 4.386 20 .970 1.940 2.909 3.880 4.850 21 1.065 2.131 3.197 4.260 5.330 22 1.167 2.335 3.503 4.670 5.840 23 1.273 2.546 3.820 5.093 6.366 24 1.381 2.770 4.154 5.540 6.924 25 1.500 3.000 4.500 6.000 7.500 26 1\620 3.240 4.860 6.480 8.100 212 MANUAL FOR Shares, $250 or $500. Dues, 50c. per week. TWO PER CENT TABLES. No. WEEKS ONE SHARE Two SHARES THREE SHARES FOUR SHARES FIVE SHARES 1 2 3 .010 .010 4 .012 .015 .020 5 .011 .020 .023 .030 6 .010 .016 .024 .033 .040 7 .010 .021 .033 .043 .054 8 .013 .027 .042 .055 .070 9 .017 .034 .052 .070 .086 10 .021 .043 .064 .084 .106 11 .026 .050 .074 .101 .127 12 .030 .060 .090 .120 .150 13 .035 .070 .105 .140 .175 14 .041 .080 .121 .161 .202 15 .046 .093 .138 .184 .232 16 .052 .104 .157 .210 .261 17 .053 .117 .177 .235 .294 18 .065 .131 .198 .263 .329 19 .073 .146 .220 .293 .365 20 .080 .161 .243 .323 .404 21 .090 .177 .267 .355 .444 22 .097 .194 .292 .390 .486 23 .101 .212 .320 .424 .530 24 .116 .230 .346 .461 .577 25 .125 .250 .375 .500 .625 26 .135 .270 .405 .540 .675 BUILDING ASSOCIATIONS. 213 Shares, $250 or $500. Dues, 50c. per week. THREE PER CENT TABLES. No. ONE Two THREE FOUR FIVE WEEKS SHARE SHARES SHARKS SHARES SHARES 1 2 .010 3 .010 .014 .017 4 .011 .017 .022 .030 5 .010 .018 .026 .034 .043. 6 .012 .024 .037 .050 .060 7 .016 .033 .050 .064 .081 8 .020 .042 .062 .082 .103 9 .026 .052 .077 .103 .130 10 .031 .063 .095 .127 .160 11 .040 .076 .111 .152 .190 12 .045 .090 .135 .180 .225 13 .052 .105 .157 .210 .262 14 .060 .121 .181 .243 .303 15 .070 .138 .207 .277 .346 16 .080 .157 .235 .313 .392 17 .090 .177 .264 .352 .441 18 .100 .200 .296 .394 .493 19 .104 .220 .330 .440 .550 20 .121 .243 .363 .484 .606 21 .133 .267 .400 .532 .666 22 .146 .292 .437 .583 .730 23 .160 .320 .480 .636 .795 24 .172 .346 .520 .693 .860 25 .187 .375 .562 .750 .937 26 .205 .408 .607 .810 1.012 2i 4 MANUAL FOR Shares, $260 or $500. Dues, 50c. per week. FOUR PER CENT TABLES. No. WEEKS ONE SHARE TAVO SHAKES THREE SHARES FOUR SHARES FIVE SHARES 1 2 .010 .012 3 .010 .013 .020 .023 4 .015 .022 .031 .040 5 .011 .023. .034 .047 .060 6 .016 .033 .050 .064 .081 7 .021 .043 .064 .087 .110 8 .022 .055 .082 .111 .140 9 .034 .069 .103 .140 .173 10 .043 .084 .127 .170 .212 11 .050 .101 .153 .203 .254 12 .060 .120 .180 .240 .300 13 .061 .140 .210 .280 .350 14 .080 .161 .243 .323 .404 15 .093 .184 .277 .370 .462 16 .104 .209 .313 .420 .523 17 .117 .235 .352 .471 .590 18 .131 .263 .400 .526 .660 19 .146 .293 .440 .584 .732 20 .161 .323 .484 .647 .810 21 .177 .355 .532 .711 .890 22 .194 .390 .583 .780 .973 23 .212 .425 .636 .850 1.061 24 .230 .461 .693 .923 1.154 25 .250 .500 .750 1.000 1.250 26 .270 .540 .810 1.080 1.350 B UILDING ASSOCIA TJONS. 2 1 5 Shares, $260 or $600. Dues, 60c. per week. FIVE PER CENT TABLES. No. WEEKS ONE SHARE Two SHARES THREE SHARES FOUR SHARES FIVE SHARKS 1 2 .010 .012 .015 3 .011 .017 .023 .030 4 .010 .020 .030 .040 .047 5 .014 .030 .043 .060 .072 6 .020 .040 .060 .081 .101 7 .027 .054 .081 .107 .140 8 .034 .070 .103 .140 .172 9 .043 .086 .130 .173 .216 10 .053 .106 .160 .212 .265 11 .063 .127 .190 .254 .317 12 .070 .150 /225 .300 .375 13 .087 .170' .262 .350 .437 14 .101 .202 .303 .404 .505 15 .115 .231 .346 .462 .577 16 .130 .261 .392 .523 .653 17 .147 .294 .441 - .590 .735 18 .164 .330 .493 .660 .822 19 .182 .360 .550 .731 .913 20 .202 .404 .606 .808 1.010 21 .222 .444 .666 .890 1.110 22 .243 .486 .730 .973 1.216 23 .265 .530 .795 1.061 1.326 24 .290 .577 .865 1.154 1.442 25 .312 .620 .932 1.250 1.562 26 .337 .670 1.012 1.350 1.687 2 i6 MANUAL FOR Shares, $250 or $500. Dues, 50c. per week, SIX PER CENT TABLES. No. WEEKS ONE SHARE Two SHARES THREE SHARES FOUR SHARES FIVE SHARES 1 2 .010 .015 .020 3 .014 .020 .027 .034 4 .012 .024 .034 .045 .054 5 .020 .032 .052 .070 .087 6 .024 .050 .073 .097 .121 7 .033 .064 .097 .130 .162 8 .041 .082 .124 .165 .207 9 .052 .103 .155 .207 .260 10 .063 .127 .191 .255 .320 11 .076 .153 .230 .304 .381 12 .090 .180 .270 .360 .450 13 .105 .210 .315 .420 .525 U .121 .243 .363 .484 .606 15 .140 .277 .415 .554 .693 16 .157 .313 .470 .627 .784 17 .177 .352 .530 .705 .882 18 .197 .394 .597 .790 .987 19 .220 .440 .657 .877 1.096 20 .243 .484 .727 .970 1.212 21 .266 .532 .800 1.065 1.332 22 .292 .583 .900 1.167 1.460 23 .320 .636 .954 1.273 1.591 24 .346 .693 1.040 1.384 1.731 25 .375 .750 1.125 1.500 1.875 26 .405 .810 1.210 1.620 2.025 BUILDING ASSOCIATIONS. 217 Shares, $250 or $500. Dues, 60c. per week. SEVEN PER CENT TABLES. No. WEEKS ONE SHAKE Two SHAKES THREE SHARES FOUR SHARES FIVE SHARES 1 2 .010 .012 .016 .021 3 .010 .016 .024 .032 .040 4 .013 .027 .040 .053 .066 5 .020 .040 .061 .081 .101 6 .030 .056 .085 .113 .141 7 .037 .075 .114 .151 .190 8 .050 .096 .145 .193 .241 9 .060 .121 .181 .242 .302 10 .074 .147 .223 .296 .371 11 .090 .177 .266 .355 .444 12 .105 .210 .315 .420 .525 13 .122 .245 .367 .480 .612 14 .142 .282 .424 .575 .707 15 .162 .324 .485 .646 .810 16 .183 .366 .550 .732 .915 17 .205 .411 .617 .823 1.030 18 .230 .460 .691 .921 1.151 19 .250 .511 .767 1.024 1.280 20 .282 .565 .850 1.131 1.414 21 .320 .621 .933 1.243 1.554 22 .340 .681 1.021 1.362 1.702 23 .367 .742 1.114 1.486 1.856 24 .403 .807 1.211 1.615 2.020 25 .437 .875 1.312 1.750 2.187 26 .472 .995 1.412 1.890 2.362 218 MANUAL FOR Shares, $250 or $500.'-Dues, 50c per week. EIGHT PER CENT TABLES. No. WEEKS ONE SHARE Two SHAKES THREE SHARES FOUR SHARES FIVE SHARES 1 .010 2 .010 .015 .020 .024 3 .010 .020 .027 .036 .046 4 .015 .031 .045 .060 .076 5 .023 .047 .070 .092 .116 6 .033 .065 .097 .130 .162 7 .043 .087 .130 .172 .216 8 .055 .111 .165 .220 .276 9 .070 .140 .207 .276 .346 10 .084 .170 .255 .340 .424 11 .101 .203 .304 .407 .510 12 .120 .240 .360 .480 .600 13 .140 .280 .420 .560 .700 14 .161 .323 .484 .647 .810 15 .184 .370 .555 .740 .924 16 .210 .420 .627 .836 .046 17 .230 .471 .705 .940 .176 18 .263 .527 .790 1.052 .316 19 .293 .584 .877 1.170 .462 20 .323 .647 .970 1.292 .616 21 .355 .711 1.065 1.420 1.776 22 .390 .780 1.162 1.556 1.946 23 .430 .850 1.273 1.697 2.122 24 .461 .923 1.384 1.847 2.310 25 .500 1.000 1.500 2.000 2.500 26 .540 1.080 1.620 2.160 2.700 BUILDING ASSOCIATIONS. 219 Shares,' $250 or $500. Dues, 50c. per week. NINE PER CENT TABLES. No. ONE Two THREE FOUR FIVE WEEKS SHARE SHARES SHARES SHARES SHARES 1 .010 2 .010 .016 .021 .027 3 .010 .020 .031 .042 .051 4 .017 .035 .051 .070 .085 5 .026 .052 .090 .105 .130 6 .037 .073 .110 .145 .182 7 .050 .097 .145 .195 .243 8 .062 .124 .186 .250 .310 9 .080 .155 .233 .312 .390 10 .096 .190 .287 .381 .477 11 .114 .230 .343 .457 .571 12 .135 .270 .405 .540 .625 13 .157 .315 .471! .630 .787 U .181 .363 .545 .727 .910 15 .210 .415 .623 .831 1.040 16 .235 .470 .706 .942 1.176 17 .264 .530 .793 1.060 1.323 18 .296 .592 .890 1.185 1.480 19 .330 .660 .986 1.315 1.644 20 .363 .727 1.090 1.455 1.820 21 .400 .800 1.196 1.600 2.000 22 .437 .875 1.313 1.752 2.190 23 .480 .960 1.432 1.910 2.387 24 .520 1.040 1.560 2.077 2.596 25 .562 1.125 1.687 2.250 2.812 26 .607 1.215 1.822 2.430 3.037 220 MANUAL FOR Shares, $250 or $500. Dues, 50c. per week, TEN PER CENT TABLES. No. WEEKS ONE SHARK Two SHARES THREE SHARES FOUR SHARES FIVE SHARES 1 .010 .010 2 .012 .020 .024 .030 3 .011 .023 .034 .046 .057 4 .020 .040 .057 .076 .095 5 .030 .060 .087 .116 .145 6 .040 .081 .121 .162 .202 7 .052 .110 .162 .216 .270 8 .070 .140 .207 .276 .345 9 .086 .173 .260 .341 .432 10 .101 .212 .320 .424 .530 11 .127 .254 .381 .510 .635 12 .150 .300 .450 .600 .750 13 .175 .350 .525 .700 .875 14 .202 .404 .606 .810 1.010 15 .231 .462 .693 .924 1.155 16 .261 .523' .784 1.046 1.307 17 .294 .590 .882 1.176 1.470 18 .330 .660 .987 1.316 1.645 19 .360 .731 1.096 1.462 1.827 20 .404 .810 1.212 1.616 2.020 21 .444 .890 1.332 1.776 2.220 22 .486 .973T 1.460 1.946 2.432 23 .530 1.061 1.591 2.122 2.652 24 .577 1.154 1.731 2.310 2.880 25 .620 1.250 1.875 2.500 3.125 26 .670 1.350 2.025 2.700 3.375 BUILDING ASSOCIATIONS. 221 Shares, $250 or $600. Dues, 50c. per week. ELEVEN PER CENT TABLES. No. WEEKS ONE SHAKE Two SHARES THREE SHARES FOUR SHARES FIVE SHARES 1 .010 .011 2 .013 .020 .027 .033 3 .012 .025 .032 .050 .063 4 .020 .043 .062 .083 .104 5 .032 .063 .095 .127 .160 6 .044 .090 .133 .130 .222 7 .060 .118 .180 .237 .297 8 .076 .151 .227 .303 .380 9 .095 .190 .286 .380 .475 10 .110 .233 .302 .467 .583 11 .140 .280 .420 .560 .700 12 .160 .330 .495 .660 .825 13 .192 .385 .577 .770 .962 14 .222 .445 .666 .890 1.111 15 .254 .510 .762 1.017 1.270 16 .287 .575 .862 1.150 1.440 17 .323 .686 .970 1.293 1.617 18 .362 .723 1.085 1.447 1.810 19 .402 .804 1.206 1.610 2.010 20 .444 .890 1.333 1.777 2.222 21 .487 .976 1.465 1.953 2.442 22 .535 1.070 1.605 2.140 2.675 23 .583 1.167 1.755 2.334 2.917 24 .633 1.270 1.954 2.540 3.173 25 .687 1.375 2.062 2.750 3.437 26 .742 1.485 2.227 2.970 3.712 222 MANUAL FOR Shares, $250 or $500. Dues, 50c. per week. TWELVE PER CENT TABLES. No. WEEKS ONE SHARE Two SHARES THREE SHARES FOUR SHARES FIVE SHARES 1 .010 .012 2 .014 .021 .020 .036 3 .013 .027 .042 .055 .070 4 .022 .046 .070 .091 .114 5 .034 .070 .106 .140 .174 6 .050 .097 .145 .195 .243 7 .064 .130 .195 .260 .324 8 .082 .165 .250 .331 .414 9 .103 .207 .311 .415 .520 10 .127 .255 .383 .510 .636 11 .153 .304 .457 .610 .762 12 .180 .360 .540 .720 .900 13 .210 .420 .630 .840 1.050 U .243 .484 .727 .970 1.212 15 .277 .555 .831 1.103 1.386 16 .313 .627 .941 1.255 1.570 17 .353 .705 1.060 1.411 1.764 18 .364 .790 1.184 1.580 1.974 19 .440 .880 1.315 1.755 2.193 20 .484 .970 1.455 1.940 2.424 21 .532 1.065 1.600 2.131 2.664 22 .583 1.167 1.752 2.335 2.920 23 .636 1.273 1.960 2.547 3.183 24 .690 1.384 2.077 2.770 3.462 25 .750 1.500 2.250 3.000 3.750 26 .810 1.620 2.430 3.240 4.050 BUILDING ASSOCIATIONS. 223 SYSTEM II. The following tables and explanation are furnished by Mr, Henry L. Smith, EXPLANATION. In determining the semi-annual dividend to which a share- holder is entitled, it is customary to compute interest on the sum to his credit at the beginning of the half-year, and to add to this the interest on the equated value of the weekly pay- ments made during the half-year. Since there has been some controversy as to the proper method of determining the equated value of 26 weekly pay- ments, the following explanation is added to make the matter perfectly clear : The half-yearly dues are paid in 26 equal installments, the first installment being paid at the expiration of one week after the beginning of the half-year and the last installment at the nd of the half-year. Hence the first payment has been on interest for 25 weeks, the second payment for 24 weeks, the third for 23 weeks, and so on to the last payment, which, being paid on the last night of the half-year, is entitled to no interest At all. Now assuming the weekly payment to be $1.00, we shall have the interest on $1.00 for 25, 24, 23, 22, 21, 20, 19, 18, 17, 16, 15, 14, 13, 12, 11, 10, 9, 8, 7, 6, 5, 4, 3, 2, 1, and weeks= 11.00 for 325 weeks, or, what is the same thing, $12.50 for 26 weeks. The following general rule (adapted from the rule for deter- mining the sum of an arithmetical progression) will be found 224 MANUAL FOR applicable for determining the equated value of the payments for any number of weeks, RULE. Multiply the weekly payment by the number of weeks less one, and this product by half the number of weeks. Divide the last product by 26 and the quotient will be the equated invest- ment for the half year. Thus in the above case, the weekly payment is $1 and the number of weeks 26. Hence $1X25X13-^26=$12.50 the equated investment as before. In order to save the above computation in each case, the following tables, No. 1 and 2, have been prepared to show the equated value of any number of dollars from $1 to $20, for any number of weeks from 1 to 26, regardless of the rate per cent. The figures given are in even dollars, as it is assumed that secretaries will not compute dividends on fractions of a dollar.* EXAMPLE. What is the equated value of the payment of $7 per week for 15 weeks ? Under the head of 7 shares and opposite the number 15 will be found $28, which is the re- quired answer. The remaining tables show the interest for 6 months upon any sum from $1 to $1,000 for any rate from 5 per cent, to 8 per cent., including each % per cent, between these rates. To determine the proper dividend from these tables we have two cases : first, where the shares have been in force for less than 6 months, and second, where they have been in force for more than 6 months. * For the convenience of those who may wish exact figures a table. No. 3, is added, in which the equated investment is given in dollars and cents. BUILDING ASSOCIATIONS. 225 If for less than six months, find the equated value of the investment from table No. 1, and then find the dividend from the interest table which is indicated by the rate per cent, of your dividend. If for more than six months, find the amount to the credit of the shareholder at the beginning of the half year. Add to this $12.50 for each dollar share, and the sum will be the amount upon which the dividend is to be computed, and this dividend may be found at once from the interest tables. EXAMPLE. A pays $7 weekly and his shares have been in force for 17 weeks. What is his dividend at 7^ per cent. ? From table No. 1 we find his equated investment to be $36, and from the 7% per cent, table we find the interest on this sum to be $1.30, or the required dividend. EXAMPLE. B pays $6 per week and his six shares have been in force more than six months. What is his dividend at 7 per cent, assuming that he had $175 to his credit at the begin- ning of the half year? $175+75 (6X$12.50) = $250. The 7 per cent, table gives the interest on $200 as $7.00 and on $50 a& $1.75, hence the dividend is $7.00+ $1.75 or $8.75. 226 MANUAL FOR No. 1. 1 Share to 10 Shares. Table showing equated semi-annual investment. Shares, $1.00 per week. *T* * A A A NO. Weeks. Share. Shares. Shares Shares. Shares Shares Shares Shares. Shares 10 Shares. $ $ $ $ $ $ $ $ $ $ 1 2 3 1 4 1 i i j 2 5 1 1 1 ( i i j 3 6 1 1 2 2 L 4 5 5 7 1 f 3 4 L f 6 7 8 8 1 2 i o 4 5 6 1 8 c 10 9 1 2 4 5 6 8 C 11 12 13 10 1 3 5 6 8 10 12 13 15 17 11 2 4 6 8 10 12 14 16 19 21 12 2 5 7 10 12 15 17 20 22 25 13 3 6 9 12 15 18 21 24 27 30 14 3 7 10 14 17 21 24 28 31 35 15 4 8 12 16 20 24 28 32 36 40 16 4 9 13 18 23 27 32 36 41 46 17 5 10 15 20 26 31 36 41 47 52 18 5 11 17 23 29 35 41 47 52 58 19 6 13 19 26 32 39 46 52 59 65 20 7 14 21 29 36 43 51 58 65 73 21 8 16 24 32 40 48 56 64 72 80 22 8 17 26 35 44 53 62 71 79 88 23 9 19 29 38 48 58 68 77 87 97 24 10 81 31 42 53 63 74 84 95 106 25 11 23! 34 46 57 69 80 92! 103 115 26 12 25| 37 50 62 75| 87 100 112 125 BUILDING ASSOCIATIONS. 227 No. 2. 10 Shares to 20 Shares. Table showing equated semi-annual investment. Shares, $1.00 per week. No. Weeks. 11 Shares. 12 Shares. 13 Shares. 11 Shares Shares Shares 17 Shares 18 Shares 19 Shares 20 Shares. $ $ 1 $ $ $ $ $ $ $ 1 2 3 1 1 1 1 1 1 1 2 2 2 4 2 2 2 2 3 3 m 4 4 4 5 4 4 5 5 5 6 6 6 7 7 6 6 6 7 8 8 9 10 10 10 11 7 8 9 10 11 12 12 13 14 15 16 8 11 12 14 15 16 17 18 19 20 21 9 15 16 18 19 20 22 23 24 26 27 10 19 20 22 24 25 27 29 31 32 34 11 23 25 27 29 31 33 35 38 40 42 12 27 30 33 35 38 40 43 45 48 50 13 33 36 39 42 45 48 51 54 57 60 14 38 42 45 49 52 56 59 63 66 70 15 44 48 52 56 60 64 68 72 76 80 16 50 55 60 64 69 73 78 83 87 92 17 57 62 68 73 78 83 88 94 99 104 18 64 70 76 82 88 94 100 105 111 117 19 72 78 85 92 98 105 111 118 124 131 20 80 87 95 102 109 116 124 131 138 146 21 88 96 105 113 121 129 137 145 153 161 22 97 106 115 124 133 142 151 159 168 177 23 107 116 126! 136 145 155 165 175 144 194 24 116 127 138 148 159 169 180 191 201 212 25 126 138 1501 161 173 184 196 207 219 230 26 137 150 162 175 187 200 212 225 237 250 228 1 S. bC c3 fl r^3 O S S H MANUAL FOR 05 00 CD 00 5 I Se5r^3o>Si3i>c85'38S'??'i>3o5^oSl>?8S'8 G> oo CD 10 CO 9 1^ OC CC OS O F- N BUILDING ASSOCIATIONS. 229 6 per cent table. Dollars. Interest. Dollars. Interest. Dollars. Interest. 1 .02 38 .95 75 1.87 2 .05 39 .97 76 1.90 3 .07 40 1.00 77 1.92 4 .10 41 1.02 78 1.95 5 .12 42 1.05 79 1.97 6 .15 43 1.07 80 2.00 7 .17 44 1.10 81 2.02 8 .20 45 1.12 82 2.05 9 .22 46 1.15 83 2.07 10 .25 47 1.17 84 2.10 11 .27 48 1.20 85 2.12 12 .30 49 1.22 86 2.15 13 .32 50 1.25 87 2.17 14 .35 51 1.27 88 2.20 15 .37 52 1.30 89 2.22 16 .40 53 1.32 90 2.25 17 .42 54 1.35 91 2.27 18 .45 55 1.37 92 2.30 19 .47 56 1.40 93 2.32 20 .50 57 1.42 94 2.35 21 .52 58 1.45 95 2.37 22 .55 59 1.47 96 2.40 23 .57 60 1.50 97 2.42 24 .60 61 1.52 98 2.45 25 .62 62 1.55 99 2.47 26 .65 63 1.57 27 .67 64 1.60 100 2.50 28 .70 65 1.62 200 5.00 29 .72 66 1.65 300 7.50 30 .75 67 1.67 400 10.00 31 .77 68 1.70 500 12.50 32 .80 69 1.72 600 15.00 33 .82 70 1.75 700 17.50 34 .85 71 1.77 800 20.00 35 .87 72 1.80 900 22.50 36 .90 73 1.82 1000 25.00 37 .92 74 1.85 230 MANUAL FOR per cent table. Dollars. Interest. Dollars. Interest. Dollars. Interest. 1 .03 38 1.00 75 1.97 2 .05 39 1.02 76 1.99 3 .08 40 1.05 77 2.02 4 .10 41 1.08 78 2.05 5 .13 42 1.10 79 2.07 6 ,16 43 1.13 80 2.10 7 ,18 44 1.15 81 2.13 8 ,21 45 1.18 82 2.15 9 .24 46 1.21 83 2.18 10 .26 47 1.23 84 2.20 11 .29 48 1.26 85 2.23 12 .31 49 1.29 86 2.26 13 .34 50 1.31 87 2.28 14 .37 51 1.34 88 2.31 15 ,39 52 1.36 89 2.34 16 .42 53 1.39 90 2.36 17 .45 54 1.42 91 2.39 18 .47 55 1.44 92 2.41 19 ,50 56 1.47 93 2.44 20 .52 57 1.50 94 2.47 21 .55 58 1.52 95 2.49 22 .58 59 1.55 96 2.52 23 .60 60 1.57 97 2.55 24 .63 61 1.60 98 2.57 25 .66 62 1.63 99 2.60 26 ,68 63 1.65 27 .71 64 1.68 100 2.62 28 .73 65 1.71 200 5.25 29 .76 66 1.73 300 7.87 30 .79 67 1.76 400 10.50 31 .81 68 1.78 500 13.12 32 .84 69 1.81 600 15.75 33 .87 70 1.84 700 18.37 34 .89 71 1.86 800 21.00 35 .92 72 1.89 900 23.62 36 .94 73 1.92 1000 26.25 37 .97 74 1.94 BUILDING ASSOCIATIONS. 231 per cent table. Dollars. Interest. Dollars. Interest. Dollars. Interest 1 .03 38 1.04 75 2.06 2 .05 39 1.07 76 2.09 3 .08 40 1.10 77 2.12 4 .11 41 1.13 78 2.14 5 .14 42 1.15 79 2.17 6 .16 43 .18 80 2.20 7 .19 44 .21 81 2.23 8 .22 45 .24 82 2.25 9 .25 46 .26 83 2.28 10 .27 47 .29 84 2.31 11 .30 48 .32 85 2.34 12 .33 49 .35 86 2.36 13 .36 50 .37 87 2.39 14 .38 51 .40 88 2.42 15 .41 52 1.43 89 2.45 16 .44 53 1.46 90 2.47 17 .47 54 1.48 91 2.50 18 .49 55 1.51 92 2.53 19 .52 56 1.54 93 2.56 20 .55 57 1.57 94 2.58 21 .58 58 1.59 95 2.61 22 .60 59 1.62 96 2.64 23 .63 60 1.65 97 2.67 24 .66 61 1.68 98 2.69 25 .69 62 1.70 99 2.72 26 .71 63 1.73 27 .74 64 1.76 100 2.75 . 28 .77 65 1.79 200 5.50 29 .80 66 1.81 300 8.25 30 .82 67 1.84 400 11.00 31 .85 68 1.87 500 13.75 32 .88 69 1.90 600 16.50 33 .91 70 1.92 700 19.25 34 .93 71 1.95 800 22.00 35 .96 72 1.98 900 24.75 36 .99 73 2.01 1000 27.50 37 1.02 74 2.03 232 MANUAL FOR 5f per cent table. Dollars. Interest. Dollars. Interest. Dollars. Interest. 1 .03 38 1.09 75 2.16 2 .06 39 1.12 76 2.18 3 .09 40 1.15 77 2.21 4 .11 41 1.18 78 2.24 5 .14 42 1.21 79 2.27 6 .17 43 1.24 80 2.30 7 .20 44 .26 81 2.33 S .23 45 .29 82 2.36 9 .26 46 .32 83 2.39 10 .29 47 .35 84 2.41 11 .32 48 .38 85 2.44 12 .34 49 .41 86 2.47 13 .37 50 .44 87 2.50 14 .40 51 .47 88 2.53 15 .43 52 .49 89 2.56 16 .46 53 .52 90 2.59 17 .49 54 .55 91 2.62 18 .52 55 .58 92 2.64 19 .55 56 .61 93 2.67 20 .57 57 .64 94 2.70 21 .60 58 .67 95 2.73 22 .63 59 .70 96 2.76 23 .66 60 .72 97 2.79 24 .69 61 .75 98 2.82 25 .72 62 .78 99 2.85 26 .75 63 .81 27 .78 64 .84 100 2.87 8 .80 65 .87 200 5.75 29 .83 66 .90 300 8.62 30 .86 67 .93 400 11.50 31 .89 68 1.95 500 14.37 32 .92 69 1.98 600 17.25 33 .95 70 2.01 700 20.12 34 .98 71 2.04 800 23.00 35 1.01 72 2.07 900 25.87 36 1.03 73 2.10 1000 28.75 37 1.06 74 2.13 BUILDING ASSOCIATIONS. 233 6 per cent table. Dollars. Interest. Dollars. Interest. Dollars. Interest 1 .03 38 1.14 75 2.25 2 .06 39 1.17 76 2.28 3 .09 40 1.20 77 2.31 4 .12 41 1.23 78 2.34 5 .15 42 1.26 79 2.37 6 .18 43 1.29 80 2.40 7 .21 44 1.32 81 2.43 8 .24 45 1.35 82 2.46 9 .27 46 1.38 83 2.49 10 .30 47 1.41 84 2.52 11 .33 48 1.44 85 2.55 12 .36 49 1.47 86 2.58 13 .39 50 1.50 87 2.61 14 .42 51 1.53 88 2.64 15 .45 52 1.56 89 2.67 16 .48 53 1.59 90 2.70 17 .51 54 1.62 91 2.73 18 .54 55 1.65 92 2.76 19 .57 56 1.68 93 2.79 20 .60 57 1.71 94 2.82 21 .63 58 1.74 95 2.85 22 .66 59 1.77 96 2.88 23 .69 60 1.80 97 2.91 24 .72 61 1.83 98 2.94 25 .75 62 1.86 99 2.97 26 .78 63 1.89 27 .81 64 1.92 100 3.00 28 .84 65 1.95 200 6.00 29 .87 66 1.98 300 9.00 30 .90 67 2.01 400 12.00 31 .93 68 2.04 500 15.00 32 .96 69 2.07 600 18.00 33 .99 70 2.10 700 21.00 34 1.02 71 2.13 800 24.00 35 1.05 72 2.16 900 27.00 36 1.08 73 2.19 1000 30.00 37 1.11 74 2.22 234 MANUAL FOR per cent table. Dollars. Interest. Dollars. Interest. Dollars. Interest. 1 .03 38 1.19 75 2.34 2 .06 39 1.22 76 2.37 3 .09 40 1.25 77 2.41 4 .12 41 1.28 78 2.44 5 .16 42 .31 79 2.47 6 .19 43 .34 80 2.50 7 .22 44 .37 81 2.53 8 .25 45 .41 82 2.56 9 .28 46 .44 83 2.59 10 .31 47 .47 84 2.62 11 .34 48 .50 85 2.66 12 .37 49 1.53 86 2.69 13 .41 50 1.56 87 2.72 14 .44 51 1.59 88 2.75 15 .47 52 1.62 89 2.78 16 .50 53 1.66 90 2.81 17 .53 54 1.69 91 2.84 18 .56 55 1.72 92 2.87 19 .59 56 1.75 93 2.91 20 .62 57 1.78 94 2.94 21 .66 58 1.81 95 2.97 22 .69 59 1.84 96 3.00 23 .72 60 1.87 97 2.03 24 .75 61 1.91 98 3.06 25 .78 62 1.94 99 3.09 26 .81 63 1.97 27 .84 64 2.00 100 3.12 28 .87 65 2.03 200 6.25 29 .91 66 2.06 300 9.37 30 .94 67 2.09 400 12.50 31 .97 68 2.12 500 15.62 32 1.00 69 2.16 600 18.75 33 1.03 70 2.19 700 21.87 34 1.06 71 2.22 800 25.00 35 1.09 72 2.25 900 28.12 36 1.12 73 2.28 1000 31.25 37 1.16 74 2.31 BUILDING ASSOCIATIONS. 235 per cent table. Dollars. Interest. Dollars. Interest. Dollars. Interest. 1 .03 38 1.23 75 2.44 2 .06 39 1.27 76 2.47 3 .10 40 1.30 77 2.50 4 .13 41 1.33 78 2.53 5 .16 42 1.36 79 2.57 6 .19 43 1.40 80 2.60 7 .23 44 1.43 81 2.63 8 .26 45 1.46 82 2.66 9 .29 46 1.49 83 2.70 10 .32 47 1.53 84 2.73 11 .36 48 1.56 85 2.76 12 .39 49 .59 86 2.79 13 .42 50 .62 87 2.83 14 .45 51 .66 88 2.86 15 .49 52 .69 89 2.89 16 .52 53 .72 90 2.92 17 .55 54 .75 91 2.96 18 .58 55 .79 92 2.99 19 .62 56 .82 93 3.02 20 .65 57 .85 94 3.05 21 .68 58 .88 95 3.09 22 .71 59 .92 96 3.12 23 .75 60 .95 97 3.15 24 .78 61 .98 98 3.18 25 .81 62 2.01 99 3.22 26 .84 63 2.05 27 .88 64 2.08 100 3.25 28 .91 65 2.11 200 6.50 29 .94 66- 2.14 300 9.75 30 ,97 67 2.18 400 13.00 31 1.01 68 2.21 500 16.25 32 1.04 69 2.24 600 19.50 33 1.07 70 2.27 700 22.75 34 1.10 71 2.31 800 26.00 35 1.14 72 2.34 900 29.25 36 1.17 73 2.37 1000 32.50 37 1.20 74 2.40 MANUAL FOR 6f per cent table. Dollars. Interest. Dollars. Interest. Dollars. Interest. 1 .03 38 1.28 75 2.53 2 .07 39 1.32 76 2.56 3 .10 40 1.35 77 2.60 4 .13 41 1.38 78 2.63 5 .17 42 1.42 79 2.67 6 .20 43 1.45 80 2.70 7 .24 44 1.48 81 2.73 8 .27 45 1.52 82 2.77 9 .30 46 1.55 83 2.80 10 .34 47 1.59 84 2.83 11 .37 48 1.62 85 2.87 12 .40 49 1.65 86 2.90 13 .44 50 1.69 87 2.94 14 .47 51 1.72 88 2.97 15 .51 52 1.75 89 3.00 16 .54 53 1.79 90 3.04 17 .57 54 1.82 91 3.07 18 .61 55 1.86 92 3.10 19 .64 56 1.89 93 3.14 20 .67 57 1.92 94 3.17 21 .71 58 1.96 95 3.21 22 .74 59 1.99 96 3.24 23 .78 60 2.02 97 3.27 24 .81 61 2.06 98 3.31 25 .84 62 2.09 99 3.34 26 .88 63 2.13 27 .91 64 2.16 100 3.37 28 .94 65 2.19 200 6.75 29 .98 66 2.23 300 10.12 30 1.01 67 2.26 400 13.50 31 1.05 68 2.29 500 16.87 32 1.08 69 2.33 600 20.25 33 1.11 70 2.36 700 23.62 34 1.15 71 2.40 800 27.00 35 1.18 72 2.43 900 30.37 36 1.21 73 2.46 1000 33.75 37 1.25 74 2.50 BUILDING ASSOCIATIONS. 237' 7 per cent table. Dollars. Interest. Dollars. Interest Dollars. Interest. 1 .03 38 1.33 75 2.62 2 .07 39 1.36 76 2.66 3 .10 40 1.40 77 2.69 4 .14 41 1.43 78 2.73 5 .17 42 1.47 79 2.76 6 .21 43 1.50 80 2.80 7 .24 44 1.54 81 2.83 8 .28 45 1.57 82 2.87 9 .31 46 1.61 83 2.90 10 .35 47 1.64 84 2.94 11 .38 48 1.68 85 2.97 12 .42 49 1.71 86 3.01 13 .45 50 1.75 87 3.04 14 .49 51 1.78 88 3.08 15 ,52 52 1.82 89 3.11 16 .56 53 1.85 90 3.15 17 .59 54 1.89 91 3.18 18 .63" 55 1.92 92 3.22 19 .66 56 1.96 93 3.25 20 .70 57 1.99 94 3.29 21 .73 58 2.03 95 3.32 22 .77 59 2.06 96 3.36 23 .80 60 2.10 97 3.39 24 .84 61 2.13 98 3.43 25 .87 62 2.17 99 3.46 26 .91 63 2.20 27 .94 64 2.24 100 3.50 28 .98 65 2.27 200 7.00 29 1.01 66 2.31 300 10.50 30 1.05 67 2.34 400 14.00 31 1.08 68 2.38 500 17.50 32 1.12 69 2.41 600 21.00 33 1.15 70 2.45 700 24.50 34 1.19 71 2.48 800 28.00 35 1.22 72 2.52 900 31.50 36 1.26 73 2.55 1000 35.00 37 1.29 74 2.59 238 MANUAL FOR per cent table. Dollars. Interest. Dollars. Interest. Dollars. Interest. 1 .04 38 1.38 75 2.72 2- .07 39 1.41 76 2.75 3 .11 40 1.45 77 2.79 4 .14 41 1.49 78 2.83 5 .18 42 1.52 79 2.86 6 .22 43 1.56 80 2.90 7 .25 44 1.59 81 2.94 8 .29 45 1.63 82 2.97 9 .33 46 1.67 83 3.01 10 .36 47 1.70 84 3.04 11 .40 48 1.74 85 3.08 12 .43 49 1.78 86 3.12 13 .47 50 1.81 87 3.15 14 .51 51 1.85 88 3.19 15 .54 52 1.88 89 3.23 16 .58 53 1.92 90 3.26 17 .62 54 1.96 91 3.30 18 .65 55 1.99 92 3.33 19 .69 56 2.03 93 3.37 20 .72 57 2.07 94 3.41 21 .76 58 2.10 95 3.44 22 .80 59 2.14 96 3.48 23 .83 60 2.17 97 3.52 24 .87 61 2.21 98 3.55 25 .91 62 2.25 99 3.59 26 .94 63 2.28 27 .98 64 2.32 100 3.62 28 1.01 65 2.36 200 7.25 29 1.05 66 2.39 300 10.87 30 1.09 67 2.43 400 14.50 31 1.12 68 2.46 500 18.12 32 1.16 69 2.50 600 21.75 33 1.20 70 2.54 700 25.37 34 1.23 71 2.57 800 29.00 35 1.27 72 2.61 900 32.62 36 1.30 73 2.65 1000 36.25 37 1.34 74 2.68 BUILDING ASSOCIATIONS. 239 per cent table. Dollars. Interest. Dollars. Interest. Dollars. Interest. 1 .04 38 1.42 75 2.81 2 .07 39 .46 76 2.85 3 .11 40 .50 77 2.89 4 .15 41 .54 78 2.92 5 .19 42 .57 79 2.96 6 .22 43 .61 80 3.00 7 .26 44 .65 81 3.04 8 .30 45 .69 82 3.07 9 .34 46 .72 83 3.11 10 .37 47 .76 84 3.15 11 .41 48 1.80 85 3.19 12 .45 49 1.84 86 3.22 13 .49 50 1.87 87 3.26 14 .52 51 1.91 88 3.30 15 .56 52 1.95 89 3.34 16 .60 53 1.99 90 3.37 17 .64 54 2.02 91 3.41 18 .67 55 2.06 92 3.45 19 .71 56 2.10 93 3.49 20 .75 57 2.14 94 3.52 21 .79 58 2.17 95 3.56 22 .82 59 2.21 96 3.60 23 .86 60 2.25 97 3.64 24 .90 61 2.29 98 3.67 25 .94 62 2.32 99 3.71 26 .97 63 2.36 27 .01 64 2.40 100 3.75 28 .05 65 2.44 200 7.50 29 .09 66 2.47 300 11.25 30 .12 67 2.51 400 15.00 31 .16 68 2.55 500 18.75 32 .20 69 2.59 600 22.50 33 1.24 70 2.62 700 26.25 34 1.27 71 2.66 800 30.00 35 1.31 72 2.70 900 33.75 36 1.35 73 2.74 iGOO 37.50 37 1.39 74 2.77 240 MANUAL FOR 7| per cent table. Dollars. Interest. Dollars. Interest. Dollars. Interest. 1 .04 38 1.47 75 2.91 2 .08 39 1.51 76 2.94 3 .12 40 1.55 77 2.98 4 .15 41 1.59 78 3.02 5 .19 42 1.63 79 3.06 6 .23 43 1.67 80 3.10 7 .27 44 1.70 81 3.14 8 .31 45 1.74 82 3.18 9 .35 46 1.78 83 3.22 10 .39 47 1.82 84 3.25 11 .43 48 1.86 85 3.29 12 .46 49 1.90 86 3.33 13 .50 50 1.94 87 3.37 14 .54 51 1.98 88 3.41 15 .58 52 2.01 89 3.45 16 .62 53 2.05 90 3.49 17 .66 54 2.09 91 3.53 18 .70 55 2.13 92 3.56 19 .74 56 2.17 93 3.60 20 .77 57 2.21 94 3.64 21 .81 58 2.25 95 3.68 22 .85 59 2.29 96 3.72 23 .89 60 2.32 97 3.76 24 .93 61 2.36 98 3.80 25 .97 62 2.40 99 3.84 26 1.01 63 2.44 27 1.05 64 2.48 100 3.87 28 1.08 65 2.52 200 7.75 29 1.12 66 2.56 300 11.62 30 1.16 67 2.60 400 15.50 31 1.20 68 2.63 500 19.37 32 1.24 69 2.67 600 23.25 33 1.28 70 2.71 700 27.12 34 1.32 71 2.75 800 31.00 35 1.36 72 2.79 900 34.87 36 1.39 73 2.83 1000 38.75 37 1.43 74 2.87 BUILDING ASSOCIATIONS. 241 8 per cent table. Dollars. Interest Dollars. Interest Dollars. Interest 1 .04 38 .52 75 3.00 2. .08 39 .56 76 3.04 3 .12 40 .60 77 3.08 4 .16 41 .64 78 3.12 5 .20 42 .68 79 3.16 6 .24 43 .72 80 3.20 7 .28 44 .76 81 3.24 8 .32 45 .80 82 3.28 9 .36 46 1.84 83 3.32 10 .40 47 1.88 84 3.36 11 .44 48 1.92 85 3.40 12 .48 49 1.96 86 3.44 13 .52 50 2.00 87 3.48 14 .56 51 2.04 88 3.52 15 .60 52 2.08 89 3.56 16 .64 53 2.12 90 3.60 17 .68 54 2.16 91 3.64 18 .72 55 2.20 92 3.68 19 .76 56 2.24 93 3.72 20 .80 57 2.28 94 3.76 21 .84 58 2.32 95 3.80 22 .88 59 2.36 96 3.84 23 .92 60 2.40 97 3.88 24 .96 61 2.44 98 3.92 25 1.00 62 2.48 99 3.96 26 1.04 63 2.52 27 1.08 64 2.56 100 4.00 28 1.12 65 2.60 200 8.00 29 1.16 66 2.64 300 12.00 30 1.20 67 2.68 400 16.00 31 1.24 68 2.72 500 20.00 32 1.28 69 2.76 600 24.00 33 1.32 70 2.80 700 28.00 34 1.36 71 2.84 800 32.00 35 1.40 72 2.88 900 36.00 36 1.44 73 2.92 1000 40.00 37 1.48 74 2.96 242 MANUAL FOR SYSTEM III. The following tables and explanation are furnished by Mr, Charles Beuzer, EXPLANATION. TO FIND THE AMOUNT UPON WHICH DIVIDEND FOR ONE SHARE IS TO BE DECLARED. RULE. Add together the numbers of weeks each $1 has been paid in. Divide this total by the number of weeks in the term. The quotient gives the average amount to b credited for the entire term. EXAMPLE. A pays $1 weekly for a term of 26 weeks. What is the average amount to his credit at the close of the term ? Add together the number of weeks $1 has been paid in, each 26, 25, 24, etc., down to 1. The total is 351 weeks. That is to say the credits to which he is entitled on his pay- ments as he has made them are together equal to a credit of $1 for 351 weeks. But $1 for 351 weeks is equal to as many dollars for 26 weeks, as 26 weeks is contained in 351 weeks which is 13> times, or $13.50. TO FIND THE RATE PER CENT. OF DIVIDEND TO BE DECLARED. RULE. Average the amount to the credit of each member according to the above rule and example. Then find the sum of all the average amounts. Find what per cent, the total profits are of this sum and this per cent, will give the rate of dividend to be declared. EXAMPLE. Suppose the association has 125 members and that the total of the averaged investments is $4,050. Suppose that the profits of the association for the term are $265. One BUILDING ASSOCIATIONS. 243 per cent, of $4,050 is $40.50. $265 will be as many times one per cent, of $4,050 as $40.50 is contained in it which is 6}f times. Since it is not convenient to calculate interest at 6|| per cent, the rate of the dividend would probably be fixed at 6 per cent, and the small balance of profits left over after the distribution at this rate would be placed in the reserve fund. TO FIND THE FIRST DIVIDEND. RULE. Find the per cent, of the given amount in the table at the given rate for the dividend. EXAMPLE. A has paid $1 weekly on 5 shares for 15 weeks. What is his semi-annual dividend, the rate being 6 per cent, per annum ? From the table on page 249 we find that the average amount to his credit is $23.10 which at 6 per cent, per annum gives him a dividend of $0.69. TO FIND ANY SUCCEEDING DIVIDEND. RULE. Add to the amount standing to the credit of a share- holder at the beginning of the term, his average credit for the term. From this sum deduct any dues withdrawn during the term. The balance will be the amount upon which the dividend is to be calculated. EXAMPLE. A has $350 to his credit at the beginning of the term. He is entitled to an average credit for his payments during the term on his five shares of $67.50. This added to the $350 amounts to $417.50. Deduct from this amount $50 dues withdrawn, leaving a balance of $367.50 the amount upon which his dividend is to be based at 6 per cent, per annum. His dividend is $11.02. The first of the following tables shows the total number of weeks' credit on $1 for the payments made during a term. The remaining tables show the average amount each shareholder has to his credit for any number of weeks from 1 to 26 and for any number of shares from 1 to 10 : 244 MANUAL FOR to r- oo oi o f< CN totoooO''-'evfoiO5oi>aec5O*-H ^ ^^ ^^ ^ ^ ^^ ^X^ s s s ; T-iwcc^iotor-oooiOi-ic^ TH ec * o to t> S5JS t-QOp I 3 BUILDING ASSOCIATIONS. 245 1 share at 50 cents. 2 shares at 50c. orl share at $1. Week. DUES. Average Amount. Week. DUES. Average Amount 1 .50 .019 1 1.00 .03 2 1.00 .057 2 2.00 .11 3 1.50 .115 3 3.00 .23 4 2.00 .192 4 4.00 .38 5 2.50 .288 5 5.00 .57 6 3.00 .404 6 6.00 .80 7 3.50 .538 7 7.00 1.07 8 4.00 .692 8 8.00 1.38 9 4.50 .865 9 9.00 1.73 10 5.00 1.06 10 10.00 2.12 11 5.50 1.27 11 11.00 2.54 12 6.00 1.50 12 12.00 3.00 13 6.50 1.75 13 13.00 3.50 14 7.00 2.02 14 14.00 4.04 15 7.50 2.31 15 15.00 4.62 16 8.00 2.62 16 16.00 5.23 17 8.50 2.94 17 17.00 5.88 18 9.00 3.29 18 18.00 6.58 19 9.50 3.65 19 19.00 7.31 20 10.00 4.04 20 20.00 8.08 21 10.50 4.44 1 21 21.00 8.88 22 11.00 4.86 22 22.00 9.73 23 11.50 5.31 23 23.00 10.62 24 12.00 5.77 24 24.00 11.54 25 12.50 6.25 25 25.00 12.50 26 13.00 6.75 26 26.00 13.50 246 MANUAL FOR 3 shares at 50 cents. 4 shares at 50c, or 2 shares at $1. Week. DUES. Average Amount. Week. DUES. Average Amount. 1 1.50 ,05 1 2.00 .07 2 3.00 ,17 2 4.00 .22 3 4.50 .34 3 6.00 .46 4 6.00 ,57 4 8.00 .76 5 7.50 .86 5 10.00 1.15 6 9.00 1.20 6 12.00 1.61 7 10.50 1.61 7 14.00 2.15 8 12.00 2.07 8 16.00 2.76 9 13.50 2.59 9 18.00 3.46 10 15.00 3.18 10 20.00 4.24 11 16.50 3.81 11 22.00 5.08 12 18.00 4.50 12 24.00 6.00 13 19.50 5.25 13 26.00 7.00 14 21.00 6.06 14 28.00 8.08 15 22.50 6.93 15 30.00 9.24 16 24.00 7.86 16 32.00 10.48 17 25.50 8.82 17 34.00 11.76 18 27.00 9.87 18 36.00 13.16 19 28.50 10.95 19 38.00 14.60 20 30.00 12.12 20 40.00 16.16 21 31,50 13.32 21 42.00 17.76 22 33.00 14.58 22 44.00 19.44 23 34.50 15.93 23 46.00 21.24 24 36.00 17.31 24 48.00 23.08 25 37.50 18.75 25 50.00 25.00 26 39.00 20,25 26 52.00 27.00 BUILDING ASSOCIATIONS. 247 5 shares at 50 cents, 6 shares at 50c. or 3 shares at $1, Week. DUES. Average Amount. Week. DUES. Average Amount. 1 2.50 .09 1 3.00 .11 2 5.00 .28 2 6.00 .34 3 7.50 .57 3 9.00 .69 4 10.00 .96 4 12.00 1.15 5 12.50 1.44 5 15.00 1.72 6 15.00 2.02 6 18.00 2.42 7 17.50 2.69 7 21.00 3.22 8 20.00 3.46 8 24.00 4.15 9 22.50 4.32 9 27.00 5.19 10 25.00 5.30 10 30.00 6.36 11 27.50 6.35 11 33.00 7.62 12 30.00 7.50 12 36.00 9.00 13 32.50 8.75 13 39.00 10.50 14 35.00 10.10 14 42.00 12.12 15 37.50 11.55 15 45.00 13.86 16 40.00 13.10 16 48.00 15.72 17 42.50 14.70 17 51.00 17.64 18 45.00 16.45 18 54.00 19.74 19 47.50 18.25 19 57.00 21.90 20 50.00 20.20 20 60.00 24.24 21 52.50 22.20 21 63.00 26.64 22 55.00 24.30 22 66.00 29.16 23 57.50 26.55 23 69.00 31.86 24 60.00 28.85 24 72.00 34.62 25 62.50 31.25 25 75.00 37.50 26 65.00 33.75 26 78.00 40.50 MANUAL FOR 7 shares at 50 cents, 8 shares at 50c. or 4 shares at $1. Week. DUES. Average Amount. Week. DUES. Average Amount. 1 3.50 .13 1 4.00 .15 2 7.00 .39 2 8.00 .45 3 10.50 .80 3 12.00 .92 4 14.00 1.34 4 16.00 1,53 5 17.50 2.01 5 20.00 2.30 6 31.00 2.82 6 24.00 3.23 7 24.50 3.76 7 28.00 4.30 8 28.00 4.84 8 32.00 5.53 9 31.50 6.05 9 36.00 6.92 10 35.00 7.42 10 40.00 8.48 11 38.50 8.89 11 44.00 10.16 12 42.00 10.50 12 48.00 12.00 13 45.50 12.25 13 52.00 14.00 14 49.00 14.14 14 56.00 16.16 15 52.50 16.17 15 60.00 18.48 16 56.00 18.34 16 64.00 20.96 17 59.50 20.58 17 68.00 23.52 18 63.00 23.03 18 72.00 26.32 19 66.50 25.55 19 76.00 29.20 20 70.00 28.28 20 80.00 32.32 21 73.50 31.08 21 84.00 35.52 22 77.00 34.02 22 88.00 38.88 23 80.50 37.17 23 92.00 42.48 24 84.00 40.39 24 96.00 46.16 25 87.50 43.75 25 100.00 50.00 26 91.00 47.25 26 104.00 54.00 BUILDING ASSOCIATIONS. 249 9 shares at 50 cents, 10 shares at 50c, or J shares at $1, Week. DUES. Average Amount. Week. DUES. Average Amount. 1 4.50 .17 ~r 5.00 .19 2 9.00 .51 2 10.00 .57 3 13.50 1.03 3 15.00 1.15 4 18.00 1.72 4 20.00 1.92 5 22.50 2.59 5 25.00 2.88 6 27.00 3.63 6 30.00 4.04 7 31.50 4.84 7 35.00 5.38 8 36.00 6.22 8 40.00 6.92 9 40.50 7.78 9 45.00 8.65 10 45.00 I 9.54 ! 10 50.00 10.60 11 49.50 j 11.43 11 55.00 12.70 12 54.00 13.50 12 60.00 15.00 13 58.50 15.75 13 65.00 17.50 14 63.00 18.18 14 70.00 20.20 15 67.50 20.79 15 75.00 23.10 16 72.00 23.58 16 80.00 26.20 17 76.50 26.46 17 85.00 29.40 18 81.00 29.61 18 90.00 32.90 19 85.50 32.85 19 95.00 36.50 20 90.00 36.36 20 100.00 40.40 21 94.50 39.96 21 105.00 44.40 22 99.00 43.74 22 110.00 48.60 23 103.50 47.79 23 115.00 53.10 24 108.00 51.93 24 120.00 57.70 25 112.50 56.25 25 125.00 62.50 26 117.00 60.75 26 130.00 67.50 250 MANUAL FOR SIMPLE INTEREST. The following method for calculating simple inter- est is taken from "Nelson's New Bookkeeping," by permission of the author. Interest is usually calculated on the basis of 360 days to the year. The simplest method of computing interest is to do it at the rate of 6 per cent, per annum, and add or subtract when it is higher or lower than that. The interest for 60 days at 6 per cent, per annum is equal to as many cents as there are dollars, or in other words, is 1 per cent, of the principal. The reason of this is obvious. 6 per cent, per annum is > per cent, per month, or 1 per cent, for two months, or 60 days. The interest for $750, $225, $327.50, for 60 days, at 6 per cent, is $7.50, $2.25, $3.28. Having the interest for 60 days, the interest for any shorter time may be found by the use of aliquots of 60. ALIQUOTS OF 60. 30=4, 20=4, 15=4, 12=4, 10=4' 6=^0, 5=-,V 4 &/ When the number is not an aliquot of 60: For 7 take ...... ................. 6 and 1. " 8 " ........................ 6 " 2. " 14 " ........................ 12 " 2. " 19 " ........................ 15 " 4. " 26 " ........................ 20 " 6. " 27 " . ..15 " 12. BUILDING ASSOCIATIONS. 251 For 29 take 1 offSO. " 35 " 30 and 5. " 38 " 30, 6, and 2. " 43 " 30, 12, " 1. " 45 " 15 off 60. 11 85 add 20 and 5. 1. To find the interest on $375.67, for 15 days, at 6 per cent, per annum : 4)3.76=interest for 60 days. .94=interest for 15 days. Interest is seldom computed on cents by secretaries. For 50 cents $1 is added to dollars; less than 50 cents are rejected. To find the interest for a number of days that is an aliquot of 60, we take that part of the interest for 60 days. For 30 days we take %, 20 days %, 15 days %, etc. When the number is not an aliquot it is made up of aliquots, a-s shown in the preceding table. 2. To find the interest on $675.15, for 27 days, at 6 per cent, per annum : $6.75=interest for 60 days. 1.687=)^ or for 15 days. 1.35 =K or for 12 days. 3.037=interest for 27 days. The following table shows the interest on any amount from $1 to $5,000 for any number of weeks from 1 to 52. From this table the interest at any other rate per cent, can be found by aliquot parts as explained before. 252 MANUAL FOR OO O C O C? O O G? O C< M CO CO COO 1> - Oi CO r>. CO CO BUILDING ASSOCIATIONS. 25^ DIVISION OF PROFITS IN SERIAL ASSOCIATIONS. One of the most difficult problems is the division of profits between the different series, and many plans have been devised only to be cast aside for another. The most equitable plan seems to be the Partnership Rule, that is, so that each share of each series receives the same per cent, per annum for the average time invested. The partnership plan is founded on what is sup- posed to be a true building society principle, namely that the building society year or period is not so many months, years, or days, but a money value of $100, and no division of gains is made, except on paper, until that value is reached, and then only the division is made to the shares that have reached that value ; besides which the partnership plan is the safest for general use, as it accomodates itself to every possible situation which may arise in building society accounts. The profits in a building association are not uniform from year to year. Various circumstances arise in which some years will show an abnormally large profit, to be offset by another year in which the profits are smaller, and contingencies may arise where the profits for the year are entirely wiped out. In all these vary- ing circumstances the partnership plan of dividing the profits will meet with more fairness and equity to all stockholders in the various series. A simple rule for the division of profits under the partnership plan is : "Multiply investments (dues counted full paid) by the average time invested. Add results for product of results. Multiply each result by the total gain since organization, and divide in each case by product 254 MANUAL FOR of results. The quotients will be each series' gain. Divide each series' gain by the number of shares in that series to find the gain per share." The work is greatly lessened by the following formula. It runs in numerical order, for an a.ssociation issuing series, beginning with the last series, as fol- lows : i, 4, 9, 1 6, 25, 49, 64, etc. When this formula is used the shares are multiplied by the formula, in- stead of the investment being multiplied by the time. The rest of the rule remains unchanged. Series. Shares. Formula. Result. i ioo X 9 = $900 2 ioo X 4 = 400 3 IOO X I = IOO Product of result $1400 Total Gain. Product of Results. Gain per Series. $IOO = $9000 H- $1400 = $64.28 IOO = 4000 -r- 1400 = 28.57 JOO 1000 -3- 1400 = 7.15 Total gain $100.00 Gain per Share. Shares. Gain per Share. 64.28 -7- IOO .64 28.57 ~+~ IO >2 9 7.15 -r- IOO = .07 The formula or money-making power of a share is determined by squaring the number of months or years as the case may be. If the association issues its shares monthly use the square of the months; if yearly, square the number of years as above. BUILDING ASSOCIATIONS. 255 The solution of the formula : If a $6 share has the money-making power of one, average time six months, then a $12 share, with twelve months average time, is a power of four, the latter being twice the money of the former, and twice the time, (2X2 =4). Therefore, if the $6 share earns 7 cents, the $12 share earns 28 cents, or four times as much. A still shorter method may be used to prove the work. Proceed with the rule until the "product of results" is obtained, in this case $1400. Then divide the gain by it, as follows : $100 -T- 1400 = .07. This at once gives the gain on one share in the last series, 7 cents. Multiply this by the formula and the result is the gain of a single share in each series. .07 X i = .07 .07 X 4 = -28 .07 X 9 = -63 The average time used is just one-half of the whole time. Fractional parts of a dollar may be discarded. CHAPTER XVII. LEGAL FORMS FOR ASSOCIATIONS. NECESSITY FOR CORRECT BLANK FORMS. In order to save time and labor, to facilitate and to expedite business, and to secure accuracy and uni- formity, every association should be supplied with a set of blank legal forms for the proper transaction and recording of its business. Such papers must be drawn in accordance with the statutes and with the rules of associations. Since the statutes differ and rules are not at all uniform it is not possible to present a full set of model blanks. SPECIMEN BLANKS. The forms printed in this chapter are in general use. They are given without approval or criticism in the expectation that before being followed by any association they will be examined carefully to see if they are in proper form for use by that particular association. An examination of these forms will in- dicate anew the necessity for closer co-operation among building associations so as to secure more uniform methods of operation. (256) BUILDING ASSOCIATIONS. 257 ARTICLES OF INCORPORATION (OHIO). These Articles of Incorporation of The Building and Loan Company. Witness, That we, the undersigned, natural persons, all of whom are citizens of the State of Ohio, desiring to form a cor- poration, for profit, under the general corporation laws of said state, do hereby certify : 1. The name of said corporation shall be The Building and Loan Company. 2. Said corporation-is to be located in County, Ohio, and its principal business there transacted. 3. Said corporation is formed for the purpose of raising money to be loaned among its members, as provided by law. 4. The capital stock of said corporation shall be dollars, divided into shares of dollars each. In Witness Whereof, We have hereunto set our hands, this day of 189.. STATE OF OHIO, ) c County of f s Personally appeared before me, the undersigned, a Notary Public within and for said County, this day of 189 , the above-named who each severally acknowledged the signing of the foregoing articles of incorporation to be his free act and deed, for the uses and purposes therein mentioned. Witness my hand and official seal on the day and year aforesaid. Notary Public. 258 MANUAL FOR STATE OF OHIO, \ cc County of j f s - I, , Clerk of the Common Pleas, within and for the County aforesaid, do hereby certify that. . , whose name is subscribed to the foregoing acknowledgement as a Notary Public was at the date thereof a Notary Public in and for said County, duly commissioned and qualified, and authorized as such to take said acknowledg- ment ; and further, that I am well acquainted with his handwriting, and believe that the signature to said acknowl- edgment is genuine. In Witness Whereof, I have hereunto set my hand and affixed the seal of said Court, at , Ohio, this day of ,189.- Clerk. By Deputy, UNITED STATES OF AMERICA, OHIO,) Office of the Secretary of State. \ s I, , Secretary of State of the State of Ohio, do hereby certify that the foregoing is a true copy of the Arti- cles of Incorporation of " The Building and Loan Company " filed in this office on the. . . . day of . . 189 , and recorded in volume , page... ., of the Records of Incorpor- ation. IN TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed my seal of office, at Columbus, the day of , A. D. 189 . Secretary of State. By Deputy. BUILDING ASSOCIATIONS. 259 SUBSCRIPTION LIST OF The Building and Loan Association of We, the undersigned, hereby agree to take the amount of shares of stock in The Building and Loan Associa- tion of , as set opposite our names. Shares Weekly Dues Admission fee In order to facilitate the permanent organization of said association, we hereby waive the statutory notice of thirty days, for holding of an election for Board of Directors of said association. NAME. RESIDENCE. SHARES. PROXY ON STOCK. BE if KNOWN, that I, the undersigned stockholder in The Building and Loan Association, do hereby appoint true and lawful attorney, with power of substitution and revocation, for and in name. ., to vote at the meeting of stockholders in said association, to be held on , the day of 189. . Done at on this day of 189-- 2 6o MANUAL FOR BOND OF OFFICERS (OHIO). Know all Men by these Presents : That .as principal, and as sureties, are firmly held and bound unto The Building and Loan Company, a corporation under the Laws of Ohio, in the sum of thousand ($ ooo.oo) dollars, to be paid to said corporation, its successors or assigns, for which payment well and truly to be made we bind ourselves, our heirs, executors, and administrators, jointly and severally, firmly by these presents. SEALED with our seals, dated the day of one thousand eight hundred and ninety The Condition of the above obligation is such that whereas the said was on the . .day of A. D. 189. .duly as of said corporation, Now, therefore, if the said. shall faithfully perform all and singular the duties incum- bent upon him as such officer aforesaid as prescribed by the Constitution and By-Laws of said corporation (which are made part hereof) and according to the orders of the Board of Di- rectors of said corporation, and shall, when duly requested by the Board of Directors of said corporation, turn over to such person or persons as it may designate, all books, papers, re- ceipts or other documents, money or moneys, or other prop- erty of any nature whatsoever, belonging to said corporation or to which the said corporation may have the right of pos- session, then these presents to be void, otherwise to remain in full force and virtue. Signed and sealed in our presence : I Seal. [ Seal. j Seal. NOTE. Bonds are backed for filing as follows : Bond of as of The Building and Loan Company. Attorney. BUILDING ASSOCIATIONS. 261 MORTGAGE (OHIO). Know all Men by these Presents : That . . in consideration of dollars, the estimated value of shares of its capital stock, advanced and paid to said by The Building and Loan Company, of , Ohio, a Corporation under the Laws of Ohio t the receipt of which is hereby acknowledged, do hereby GRANT, BARGAIN, SELL, and CONVEY to the said Building and Loan Company, its successors and assigns, for-- ever, the following estate, situated in the County of , State of , and bounded and described as follows : and all the ESTATE, TITLE, and INTEREST of the said grantor either in Law or in Equity, of, in, and to the said premises : TOGETHER with all the privileges and appurten- ances to the same belonging, and all the rents, issues, and profits thereof; TO HAVE AND TO HOLD the same, in fee, to the use of said Building and Loan Company, its successors and assigns, forever. AND the said for and for heirs, executors, and administrators, do hereby COVENANT with the said Building and Loan Company, its successors and assigns, that is the true and lawful owner of the said premises and have full power to convey the same, and that the title so conveyed is CLEAR, FREE and UNINCUMBERED ; and further, that will WARRANT and DEFEND the same against the claims of all persons whomsoever. 262 MANUAL FOR Provided, nevertheless, that, whereas the said ha become a member of said Building and Loan Company, and subscribed to share therein to be paid in weekly installments of per share, and received in ad- vance from said Company said $ , the estimated value of said share , shall pay said Company, according to the Consti- tution and By-Laws, without demand therefor any fines and assessments thereby imposed, and said weekly installments of per share as premium on said advance, and an interest upon said $ in weekly payments of . . cents per share for the first year, and thereafter a weekly sum or amount sufficient to keep the interest upon the amount due at the be- ginning of each year at the rate of six per cent, per annum until the full amount of said . . shares shall have been paid, with all dues, premium, interest, fines, etc., thereon according to the Constitution and By-Laws, and shall pay all taxes, as- sessments, insurance, ground rents, or charges of any kind that may become due and payable on said property ; and in case of default in making any of said payments for a period of ninety days, and a suit of foreclosure be brought therefor, then the amount of the face of this mortgage, with all arrear- ages thereon, less the credits paid upon the principal, shall become due and payable at once, all as prescribed by the said Constitution and By- Laws ; and if the said . . ; shall comply with all the foregoing obligations, then these presents shall be void. In Witness Whereof, the said who hereby release right and expectancy of dower in said premises, ha hereunto set hand this.... day of in the year of our Lord, one thousand eight hundred and ninety .... (189 ) Signed, sealed and acknowledged in presence of us : BUILDING ASSOCIATIONS. 263 The State of Ohio, County of , ss. Be it remembered, That on the day of . in the year of our Lord, one thousand eight hundred and ninety (189 ) before me, the undersigned, a Notary Public, in and for said County, personally came the grantor in the foregoing mortgage, and acknowledged the signing and sealing thereof to be .... voluntary act and deed, for the uses and purposes therein mentioned. In Testimony Whereof, I have hereunto subscribed my name and affixed my notarial seal on the day and year afore- said, Notary Public, County, Ohio. 189-. The within mortgage being fully paid and satisfied, may be cancelled off record, by order of the Board of Directors. The Building and Loan Company. By President. and Secretary. fl J " rr I, be O CO & 1 8.55 O O "* o n~ l-s 1 8 o 3 CU follows : : of any fine or other a: :he by-laws of said Ass ntof the premium for ,0 Dollars per week. t of the interest due 01 Dollars per week. of said payment shal: 11 be continued until t ends declared thereon, 3 8 I 1 ? CD t> O Ul I Received of Tl > t: c c d Association, w tn | 1 cC S r. To the payment pursuance of 1 ND. To the payme K D. To the paymen loo LTH. The balance payments sha with the divid Id fail ount of said loai O o 'i * CO ft 8 3 H I 2 w H O . " M i ^3 s t-i S, f/1 ^ lii 1 P O "o 3 270 MANUAL FOR MECHANICS' LIEN (OHIO). , Ohio 189.. In consideration of one dollar, and other valuable consider- ations, the receipt of which is hereby acknowledged, do hereby agree with The Building and Loan Company of County, Ohio, that will not take a mechanics' lien on the real estate of situated County, Ohio, to secure amount due or to become due , for material furnished or labor performed in or about the erection of on said real estate, under contract made with the said and hereby waive any right of priority of lien might have on said real estate in favor of said Company. Collateral Note for Loan on Pass Book. $ 189.. after date promise to pay to the order of The Building and Loan Association, of Dollars, with per week interest, the same being per cent, on the amount of loan, and herewith transfer my Pass Book No to said Association, to be held as collateral until payment of this loan, said loan being subject to the Constitution and By-Laws of the Association. Value received No.. Due.. STUB. $ Date. . . No. . Due BUILDING ASSOCIATIONS. 271 ATTORNEY'S REPORT. To the Board of Directors of The Building and Loan Association of Gentlemen : I find that the title to property of. situated is in the name of said party, as the same appears indexed of Record in the Recorder's Office of. .County, State of Ohio, subject however to the following encumbrance : The taxes are . Remarks . Respectfully submitted, Attorney. 189-. 272 MANUAL FOR BUILDING ASSOCIATIONS. S Si s -s J3 | ! jU ' 3 ~, a s - ; o * -8 - 11 si ft rt w VH and the best method for doing this is by the general circulation of well prepared reports, giving full and explicit information in reference to its business and methods. Secretaries and directors, in the preparation and publication of reports, should bear this advertising feature in mind, and should arrange reports so as to be used in this way. It is quite evident from an examination of this subject that there is necessity in most of the states for additional legislation in reference to this matter, and much room for improvement in the practice of many associations in the way of making reports.* BUILDING ASSOCIATIONS. 281 & 3 I s 5zT I i S5 CO W 282 MANUAL FOR BUILDING ASSOCIATIONS. Seventeenth Ward Building and Loan Company, CINCINNATI, OHIO. NINTH ANNUAL STATEMENT. CASH. DR. CR. Balance Aug. 6, 1890 Capital Stock 1 7,475 5 68 080 69 $53,281 42 76,662 50 47 924 65 12,773 95 Pass Book Loans Bills Payable 10,720 95 36,634 10 35,147 oo 995 78 Profit and Loss Balance Aug. 5, 1891 8,275 37 250 6 1 $179,111 26 $179,111 26 PROFIT AND LOSS. DR. CR. $ I 39 33 $ 6,979 69 709 50 Fines 138 97 Initiation Fees 397 oo IO OO Pass Books. 29 oo Cash Over II 21 Reserve Fund 409 56 Expense. S5645 Contingent Fund 199 48 Shareholders 7,"9 39 Balance Aug. 5, 1891 , 37028 $8,684 93 $8,684 93 SHAREHOLDERS. DR. CR. Balance Aug. 6, 1891 . ... Capital Stock 4 68 080 69 Mortgage Loans. .... Reserve Fund 28 24 Profit and Loss Balance Aug 5 1891 n 20, 3 7 $179,404 22 $179,404 22 ASSETS AND LIABILITIES. DR. CR. Mortgage Loans Pass Book Loans. ... . Fire Proof Safe Cash 210 00 Bills Payable Shareholders i 20 103 78 199 48 Undivided Profits . 770 28 $122,673 54 $122,673 54 Shares Loaned, 291. Shares Free Running, 921. Total, 1212. CHAPTER XIX. BOOKS AND BLANKS, GENERAL SUGGESTIONS. The keeping of the accounts of the associations is a matter too extensive to be discussed in all its details here.* In point of fact there is not yet that uniform- ity in the methods of bookkeeping in associations which we may certainly expect to see introduced in the near future. The improvements which have appeared in the last few years are astonishing. A good illustration of the labor-saving methods which are being introduced is seen in the Dues, or Secretary's Book. Formerly postings were made from this book weekly (or monthly) after each meeting. *In R. Nelson's "New Bookkeeping" will be found a system for the keeping of building association accounts which will be of interest to secretaries and other officers of associations. The new edition of Accounts and Business by R. Nelson is a work, which should be in the hands of every person interested in this subject. (283) 284 MANUAL FOR The book is now usually made with a column set apart for each evening's receipts and a numbered line for each member's book. The book is arranged in sections covering each quarter or half year, with necessary rulings for totals. These totals are posted quarterly or semi-annually. It is easy to see how much time and labor is saved and how much the liability to error is lessened by the new method. The Secretary's Cash book is also now arranged with polyform columns and rulings, so that, as the sec- retary enters, meeting by meeting, the various receipts and disbursements, each upon its appropriate line in its appropriate column, it is virtually posted to its appro- priate account. He is thus able at any time, without the trouble of making up a balance sheet or detailed statement, to read off from the page of his cash book the actual financial standing of the association, the amount of gain and loss on each item, etc., and at the end of the term, he simply enters the entire amount of each item on its account in the ledger. Formerly, the custom was to enter all such items, meeting by meeting, in an ordinary cash book and then to jour- nalize and then to post them into the ledger a very burdensome task as secretaries will testify. In addition to the improvements noted in these two books a large number of other books and various blanks and forms have been devised to save labor, to secure accuracy, and to expedite the business of associations. The work of an association in the taking of dues, etc., must be done so quickly, and accuracy in all things is so essential to the success of the associa- tion, that directors and officers should be careful to BUILDING ASSOCIATIONS. 285 adopt the best system possible and to provide them- selves with the best and most convenient books and forms. It is especially desirable that the system adopted should be so simple and comprehensive that its workings can be understood easily even by uneducated and inexperienced members. The books and forms should be those that have stood the test of actual experience and have given satisfaction. In ordering books care must be taken that they correspond to each other, so that all will fit in properly as parts of one system. Economy should be practiced in the purchase of books as in all matters connected with an association. But it will be found poor economy that does not pro- vide the best available books for the keeping of the accounts and records. BOOK ACCOUNT. Many secretaries keep a separate account of the blank books and pass books used by the association. Secretaries sometimes have difficulty with this account. The matter is very simple when once understood. The cost of all books purchased should be separately charged to the book account, and all receipts from members for pass books should be credited to this account. At the end of each fiscal term a certain percentage, to cover the cost of the books in use for that term as determined by the board of directors, should be charged to the profit and loss account. The following exhibit illustrates how this account may be kept: 286 MANUAL FOR BOOK ACCOUNT. Jan. 16 Jun 29 Cash (Acc't Books) " 500 Pass Books P. & L. gain on 64 Pass Books. 6 6 $7200 55 00 896 Jan. 29 By cash f.4 P. Bks. 25c "5%P.&L.Acc'tBks By Bal. Acc't Books " " Pass Bks.(436) 7 $1600 3 60 6840 47 96 135 96 135 96 July 1 Bal. Acc't Books. " 436 PassBks. tl 9 9 $6840 4796 PASS BOOKS. The pass book is the book furnished to each mem- ber by an association, in which are recorded the receipts for his dues as he pays them from meeting to meeting. This book is known under various names as, "Pass Book," "Member's Book," "Receipt Book," "Stock Book," etc. There is so much inquiry in reference to these books, and such frequent difficulty in new asso- ciations in getting them in proper form, that a full description is given here to assist persons interested in organizing associations. These books are subjected to constant usage and must last a long time, since, usually, a period of from six to ten years must elapse before the stock is finally paid up. Pass books should therefore be made of good paper, in strong and durable binding, of convenient size, and to open easily. For the convenience of officers and members, and in order to expedite the business of the association, pass books should be care- fully and systematically arranged and properly adapted for their purpose. Pass books are usually 4 to 4^ inches in width and 6 to 7 inches in length. They should contain the BUILDING ASSOCIATIONS. 287 constitution and by-laws of the association, a blank certificate of stock, blanks for transfers of stock, and 1 6 leaves 32 pages properly ruled and lettered for receipts for dues. The certificate of stock is as follows : The .Building and Loan Association, of Book No Certificate of Stock. THIS CERTIFIES, that is entitled to . . shares, subscribed in The Building and Loan Association, which are to be regulated and controlled by, and which may be transferred according to the Constitution and By-Laws of, said Association.* Admission Fee, $ Book, cents. Received Payment, Secretary. 189 . The certificate of stock is made to occupy one page of the Pass Book. On the back of this certificate should be printed two or three blanks for the transfer of shares as follows : For value received, I hereby transfer to all my claims, rights, and interest in shares of the capital stock of The Building and Loan Association, of , on this the day of 189. .Secretary. The leaves for receipts should be made of good, strong writing paper, interleaved with light blotting paper. The paper should be ruled with fifteen lines to the page and should have printed headings and column rulings as follows : A 09 THB * Some associations put their seal 011 each certificate. 3 88 MANUAL FOR DATE. DUES. Interest. Premium FINES RECEIPT. . Pass books are sometimes made with twenty-six instead of fifteen lines to the page, but this plan either makes the book inconveniently large for carrying and handling, or causes the rulings to be too close for con- venience. On the front page of the cover of the book should be pasted the number of the book and a printed label as follows : SS5 In account with The Building and Loan Association, of No. Shares . DEPOSIT ENVELOPES AND SLIPS. When a member appears to make his payments he fills out a deposit ticket or slip and encloses this, with the exact amount of his payment, at the proper place in his pass book, and hands it in. Some associations use the deposit envelope instead of the slip, and this is much better. The envelope is used exactly as the slip except that the money is enclosed and sealed up in it, thus preventing its being accidentally dropped out of the book and causing loss, delay, or error. The receiving officer calls off the number of the pass book BUILDING ASSOCIATIONS. 289 and the amount of money written on the slip or envel- ope, and passes all over to the other members of the finance committee, one of whom counts the money, and another receipts for the dues in the pass book and returns it to the owner, the slip or envelope being placed on file. When dues are received in this man- ner it is very easy to check up the accounts at the close of the meeting. In some associations the money is simply enclosed in the pass book without any deposit slip or envelope. Where there is a large mem- bership, owing to the numerous payments and the rush and incidental confusion, errors are likely to occur, both in the money paid in and in the entries. Where deposit slips or envelopes are used it is easy to locate errors and to make necessary corrections. Below are forms of deposit slips and deposit envel- opes: DEPOSIT SLIP. The Building and I^oan Association. 189.. Name Book No No. of Shares For.. ..weeks. Dues Interest Premium Fines Admission \ or j- Transfer J Book . Total.. $ cts. 290 THE. MANUAL FOR ..BUILDING ASSOCIATION of... DEPOSIT ENVELOPE. NOTE. All moneys handed in to the Association for Credit on Member thip Account^ must be enclosed in one of these envelopes, and the blanks properly filled out, to prevent mistakes or disputes. Interest on Loan, ...... ,~. BUILDING ASSOCIATIONS. 291 NECESSARY BOOKS AND FORMS. The following books and forms will be found essential in an association numbering from 250 to 400 members : 500 Pamphlets Constitution and Objects of the Asso- ciation. 500 Pass Books. 1 Constitution and Signature Book. 5000 Deposit Envelopes or Slips. First Secretary's Dues or Receipt Book. Second Secretary's Book. Treasurer's Receipt Book. Treasurer's Cash Book. Secretary's Itemized Cash Book. Individual and General Ledger. Appraisement Book. Withdrawal Book. 1000 Warrants on Treasurer Perforated, numbered, and bound. Blanks for Mortgages, Bonds, Notes, etc., as may be re- quired. 1 Record Book for the purpose of keeping the min- utes of the meetings of the association and of the Board of Directors, An association can not well transact business with- out possessing at least the books and forms enum- erated above. But, in addition to these, most associa- tions use various other books and forms which are found of the greatest convenience and value in the transaction of their business. The books and forms mentioned above, together with many others, will be found described in the list given below. BUILDING ASSOCIATION SUPPLIES. The following is a list, alphabetically arranged, of books and forms for building associations, prepared by 292 MANUAL FOR S. Rosenthal & Co., Cincinnati, who have made a specialty of furnishing building association supplies for the past twenty-three years : Amendments to the Constitution. When amendments are made to constitutions it is desirable that a copy of the amend- ment be placed in each member's pass book. These amend- ments are printed on gummed paper so that a copy can be placed in each pass book. Application Book (For Loans]. Copyright. Has columns for date of application for loan, name, amount of money desired, how much granted, and spaces for description of property, reports of committees with their signatures, and other important remarks. Application Book (For Loans), Combined with Attorney's Reports. Application Book (For Membership}. Applications for Money (Dividends). Bound in book form, numbered and perforated with stubs, or plain without stubs. Furnished unbound also. Applications for Money (Dividends and Withdrawals Com- bined). Bound or loose as described above. Applications for Money (Withdrawals). Bound in book form, arranged for withdrawals in full or in part, numbered and perforated with stubs, or plain without stubs. Furnished unbound also. Appraisement Book. For recording reports of appraising committees. Made in all sizes, and arranged in conformity with law. Balance Sheets. Showing entire business of an association for a stated time. Bonds for Officers. (See form, page 260.) Cash Book and General Ledger. Copyright. All entries to the general accounts such as interest, premium, etc., are posted when made, and, at end of each quarter or half year, or, at any other time, a complete balance can be read off from this. Considerable time is saved by using this book. Cash Book for Secretaries. With special rulings and heads and all necessary polyforms and divisions. BUILDING ASSOCIATIONS. 2% Cash Book, H. B. Clutes\ Copyright. Cash Booky H. L. Smith's. Copyright. Showing a com- plete summary of the business of an association for six months condensed on one sheet. Cash Book for Treasurer. Made in convenient pocket form. Certificates of Paid- Up Stock. With ten stubs of $100 each, perforated and numbered, with laws pertaining to same printed on back. Check Books (Bank). Circulars. All styles and sizes Collateral Notes. (See forms.) Combination Check Journal, S. T. Williams's. Copyright. Constitution Record Book with Members' Numerical Re- gister and Ledger Index Combined. Contains blank space for recording constitution and amendments thereto, with blanks for signatures of members numbered in regular order, record of shares held by each member, place of residence, pass book number of each member, and ledger folio of each member arranged in alphabetical index. Deposit Blanks. With or without space for advertise- ments. Deposit Envelopes. Copyright. Large and small, per- forated. Can be printed on both sides, one side with blanks for deposits, and the other side for advertising purposes These are very useful and serve as a check on the receipts. Deposit Fee Book. For keeping account of fees advanced by members applying for loans. Dividend Books. For keeping dividend accounts. The members' numbers are printed in regular order, 50 to a page, with space for names adjoining, after which follow spaces for amounts of dividends and receipts therefor. Dividend, Report Record, and Reserve Fund Book. Copy- right. Dividend Tables. Dividend Warrants. Dividend Withdrawal Blanks. Dodgers. All sizes, English or German. Dues Books. Different designs of weekly, monthly, quar- 2 9 4 MANUAL FOR terly and semi-annual dues books of the most approved patterns. Election Tickets. And specially ruled Tally Sheets. Fur- nished to order. Envelopes. Printed to order. General Ledger and Cash Book. Index. Plain and voweled. Index (Combination}. See Constitution Record Book. Individual Ledgers. Made to order in any desired form. We have ledgers arranged for posting every week, month, half- year, etc. We make a special Ledger for Building Association which can be used for quarterly and half-yearly postings. We also manufacture ledgers with dates printed in, thus saving considerable time in making entries for those secretaries who post receipts at each meeting. Individual Ledger, A. Vox's. Copyright. Individual Ledger, M. Burgheinfs. Copyright. Letter Heads. Printed to order. Mechanic's Liens. (See forms.) Memorials. Resolutions of respect for deceased officers, directors, and members, printed in neat and appropriate styles. Mortgage Blanks. (See forms.) Mortgage Clause Blanks. (See form.) Mortgage, Lease, and Insurance Record. Ruled to show number, amount of loan, expiration of lease, location of prop- erty, and amount and expiration of insurance, as well as can- cellation. Nightly Receipt Books and Sheets. (See Dues Book.) Notes. Blank, or bound in book form, drawn in conformity with law. Note Heads. Printed to order. Notices to Members. Printed to order. Numbers. In sets of i to 500, and i to 1000 in different sizes and gummed. Order Books. Made in all sizes, numbered and perforated. Pads (Memorandum). All sizes. Paid-Up Stock Certificates. (See Certificates of Paid-Up Stock.) BUILDING ASSOCIATIONS, 295 Paid- Up Stock Certificate Ledger and Dividend Books. Pamphlets, in English and German, Printed to order. Pass Books. Posters. All sizes to order, for advertising sales of prop- erty, etc. Proxy Blanks. For elections (See form.) Receipts. Plain blanks, or bound in book form. Record Books. In different styles with or without index. Also printed records to order. Reports. Semi-annual, annual, etc., printed in any form. Share Accotmt Books. Seals. Secretary Books. For the First and Second Secretaries. The best designs in this line. Special attention is called to the new 13 and 26 week books, made on the most labor-saving plan. Second Secretary books in different styles. Show Cards. Signs for place of meeting. Solicitor's Reports. Subscription Blanks. For new associations. Subscription Books. Stock. Tally Books and Blanks. Generally used by the Second Secretary or Finance Committee. Tally Sheets. For elections. Transfer Book. Stock. Treasurer's Cash Books. Made especially for treasurers in convenient pocket form. Treasurer's Receipt Books. Regular. Also, extra ruled and printed, with 13 weeks (three months,) receipts to a page, and space for date, signature, amount, and account for overs and shortages in cash received. Vos's Individual Record and Ledger. Williams' 1 s Building Association Books. All the various books copyrighted by Mr. S. T. Williams, the expert account- ant. Williams' s 26 Weekly Dues Register. For entering dues. Withdrawal Blanks. In pads or book form. APPENDIX. The following forms for constitution, by-laws, and rules, have been compiled from those in use by sever- al associations in successful operation, and embody the best features of all of them. The provisions here given have therefore been thoroughly tested in prac- tice. However, it is not to be expected that these forms shall be followed literally by any association. Some modification to meet local or other requirements must necessarily vary the form and text in nearly every instance. Much care and intelligence should be em- ployed in filling the several blanks properly in order that the association may be established on a practical working basis.* * In New Jersey associations are required to incorporate in full in their constitution all the provisions of the statutes under which they act. All such special provisions in the statutes of any state, must, of course, be carefully observed. (296) APPENDIX. 297 CONSTITUTION. ARTICLE I. Name. The name of this association shall be The Building and Loan Association * of (city) (state), and its place of business shall be in the (city or town) of County ARTICLE II. Object. The object of this association shall be to afford to its mem- bers an opportunity to invest their savings safely at a good rate of interest, and also to accumulate or to borrow money for use in purchasing real estate, buying, building or re- pairing houses, and for such other purposes as are author- ized by law. ARTICLE III. Capital Stock. The capital stock of this association shall be dollars ($ ), divided into shares of. ... dollars ($ ) each, which shall be paid in in weekly (or monthly) installments of on each share. ARTICLE IV. Membership. Any person or corporation, qualified by law,t may become a member of this association, by subscribing for one or more shares of its stock and shall be entitled to all the benefits and * The Ohio statutes require that the name of every corporation shall be- gin -with the word "The" and end with the word "Company". Special restrictions in reference to the names of associations are found m the statutes of some of the other states. Thus, in Massachusets, the words "Co-operative Saving Fund and Loan Association", must form part of the name of each association, while in Maryland, the name of the city or t9wn and county where the association is formed, must be part of the title. Wherever an association is organized the statutory requirements must always be met. t The laws in the different states determine what persons and corpora- tions shall be adjudged capable of making contracts. In some states the special laws under which associations operate confer the right to become members upon persons who, under the general laws would be debarred from the privilege, such, for instance, as minors and married women. 298 APPENDIX. privileges, and be subject to all the duties of a member as provided in this constitution, and in the rules and by-laws established hereunder. ARTICLE V. Meetings and Elections. SECTION i. There shall be held an annual corporate meet- ing of this association, on the day of in each year at o'clock p. M. for the following objects : 1. The election of officers. 2. The reading of annual reports. 3. The transaction of such other business as is provided for hereinafter, or as may be legally brought before said meeting. SECTION 2. Two weeks previous to the annual meeting the board of directors shall appoint a committee of five share- holders, outside of their own number, who shall nominate a list of candidates equal to double [or treble] the number of va- cancies that will arise in the directory. Tickets containing the names of these candidates shall be provided by said committee for the use of the members at the election. Each member shall be entitled to one vote for each share of stock owned by him. The election shall be by ballot, and the persons receiving the greatest number of votes shall be declared elec- ted as directors for the term of * The polls shall be opened at o'clock P. M. and closed at . . . .o'clock p. M. SECTION 3. Regular weekly meetings! of the members for the payment of dues, the loaning of money, and the transaction of the other business of the association, shall be held at such times and places as the directors may designate. If the time or place of meeting is changed, the directors shall give public notice to all the members of such change, at least one week * Directors are elected generally for the term of one year. In that case the blank should be filled with the words "one year". Some associations however, prefer to retain part of their directors (say one-half or two-thirds) to hold over. In that case, only one-half or one-third of the directors are elected annualy, and then this blank should be filled with the words "two years" or "three years" as the case may be. In case of a tie vote the elec- tion usually is decided by lot. f Or bi-weekly, or monthly, as the case may be. APPENDIX. 299 previous thereto, by advertisement in at least one newspaper of general circulation in the county of . . , or by sending a special notice to each member by mail or otherwise. The directors shall hold their regular business meetings at the same times and places fixed for the regular meetings of the members. SECTION 4. Special corporate meetings shall be called by the president at any time upon the written request of ... mem- bers ; and the notification to the members shall be in the same manner as above provided for a change in the regular weekly meetings. SECTION 5. Members may be represented and may vote in the corporate meetings by proxy.* ARTICLE VI. Officers and Their Powers. SECTION i. The power to transact the business of this asso- ciation shall be vested in a board of .... directors, a majority of whom shall constitute a quorum. They may enact and amend by-laws and rules for their own government and for the government of the business of the association. They may also fill vacancies in the board, provided such vacancies do not exceed one-half of the membership of the board. When the vacancies exceed one-half of the membership the remaining members shall call a special corporate meeting of the asso- ciation at which an election to fill the vacancies shall be held under the prescribed rules. SECTION 2. The board of directors shall enter upon their duties at the first regular meeting after their election. They shall organize by electing from their own number a president, a vice-president, a treasurer, a secretary, and as many assist- ant secretaries as they may deem necessary.! ARTICLE VII. Amendments. SECTION i. All proposed amendments to this constitution shall be submitted in writing to the board of directors for * In the state of Michigan proxies are prohibited by law. t At the organization of each new board the oath of office should be administered by some person duly qualified to administer oaths. 300 APPENDIX. approval. If approved by the directors the proposed amend- ments shall be printed and submitted to the shareholders for ratification at the annual meeting or at a special meeting called for that purpose, and, with the concurrence of two-thirds of the members present and voting at such meeting, the propos- ed amendments shall be declared adopted. SECTION 2. At least one week's notice of the corporate meeting at which a proposed amendment is to be submitted to the shareholders shall be given through the mail or by adver- tisement in some newspaper or newspapers of general circu- lation in county ARTICLE VIII. Dissolution. This association may be dissolved by agreement of its members. A motion to dissolve the association, in writing and signed by shareholders representing at least two-thirds of the shares, must be presented at a regular meeting of the board of directors, and must be read by the secretary at three con- secutive meetings. When read the second time the board of directors shall by advertising in papers of general circulation in county , call a special meeting of the shareholders to consider it. If in said meeting three- fourths of all the shares shall vote by written ballot for a dissolution of the association, then the association shall be dissolved. The board of directors shall then take the neces- sary legal steps to wind up the affairs of the association. BY-LAWS. Officers and their Duties. SECTION I. The president shall preside at all the meetings of the directors and shall perform the duties usually pertain- ing to his office. He shall sign all orders issued by the board of directors, and attend to the proper and prompt recording of the' mortgages and other documents which require a public record. He shall be the custodian of all the bonds given by the officers except his own which shall be held by the secre- tary. APPENDIX. 301 SECTION 2. The vice-president shall perform the duties of president in the absence or disability of the latter. SECTION 3. The treasurer shall receive all the moneys paid to the association, giving his receipt therefor, and shall pay all orders issued by the board of directors and signed by the president and secretary. At the end of his term, or at any time the directors may order, he shall deliver to his successor in office all books, papers, money, and other property of the association in his possession. SECTION 4. The secretary shall record the proceedings of the meetings of the association and of the board of directors. He shall keep an accurate account of the financial transactions of the association. At the close of the fiscal year, and at such other times as the directors may order, he shall present to the association full reports of the business transacted during the year together with an itemized statement of the profits and losses and of the assets and liabilities of the association. He shall have the custody of all the books and papers of the asso- ciation not otherwise provided for, subject to the order of the board of directors, and shall deliver the same to his successor in office. SECTION 5. The assistant secretaries shall assist the secre- tary in the discharge of his duties as he shall direct. In the absence or disability of the secretary the assistants shall fill his place in the order of their priority. SECTroN 6. The directors shall appoint an attorney for the association whose duty it shall be to attend to all legal busi- ness referred to him by the directors, including the examina- tion of titles and the preparation of mortgages. He shall make a written report to the directors of the facts in the case upon completion of each duty assigned to him. SECTION 7. The compensation to be paid to officers of the association for their services shall be determined by the board of directors. SECTION 8. The officers of the association shall give bonds with two approved sureties in the following sums for the faithful discharge of their duties ; president, dollars, ($ ), the vice-president, dollars ($ ), the secretary, dollars ($ ), each assistant secretary, dollars, 302 APPENDIX. ($ ),the treasurer, dollars ($ ), and the attorney, dollars ($ ). Committees. SECTION 9. The directors shall appoint from their own number regular standing committees as follows : a finance committee of members, and an appraising committee of members ; they shall also appoint an auditing committee of . . shareholders who shall not be directors. They shall also appoint from time to time such special committees as they may deem necessary and expedient. SECTION 10. It shall be the duty of the finance committee to superintend the collection of the dues of members, and of all other moneys due the association, and to witness the delivery of the same to the treasurer. SECTION u. It shall be the duty of the appraising com- mittee to visit the premises and ascertain the cash value of all real estate offered as security for loans, and to report the same in writing to the board of directors at their first meeting after the appraisement is made. SECTION 12. It shall be the duty of the auditing committee to examine and to audit the accounts and papers of the associ- ation from time to time as they may deem necessary or may be ordered by the board of directors, and to verify the official reports and financial statements of the secretary. The com- mittee must present all reports in writing. SECTION 13. The board of directors shall determine the amount of compensation to be paid to members of committees for services rendered. Time of Meetings. SECTION 14. The regular weekly meeting for the payment of dues, interest, premiums, fines, etc., the loaning of money, and the other financial transactions of the association shall be held every evening at such place as may from time to time be designated. SECTION 15. The time of meeting from April to September inclusive shall be between the hours of 8 and 9 o'clock p. m., and from October to March inclusive from 7:30 to 8:30 o'clock p. m. APPENDIX. 303 Payments. SECTION 16. All moneys due to the association shall be paid at the regular meetings to the finance committee, who shall give proper receipt for all money paid in. SECTION 17. Bach member must pay an admission fee of cents for each share, cents for a pass book or a paid- up stock certificate, and dues of . . . per share per week. No member shall hold in his own right more than , shares of stock in this association, and no transfer shall be valid unless made upon the books of the association and after payment of a transfer fee of cents per share. SECTION 18. Every member must continue to pay his dues until his accumulated payments and the dividends de- clared thereon and remaining undrawn, together shall equal the full value of his stock, at which time the member shall be entitled to receive the amount thereof in cash, and a pro rata share of the reserve fund. Paid-up Stock. SECTION 19. Should any member desire to pay in the full face value of his shares at the time of subscribing for the same, or at any time thereafter, or should any member whose shares have become paid-up as provided in the preceding section, prefer to allow the money due thereon to remain in the pos- session of the association, the board of directors may, if they think best, accept said money and issue to such members cer- tificates of paid-up stock for the share or shares so paid up. SECTION 20. Upon the paid-up stock for which such cer- tificates are issued, the members shall not be required to pay weekly dues, and shall be entitled to receive in cash the amount of all dividends declared theron. But such stock, ex- cept as is provided in the next section, shall be governed by the same rules as to withdrawal and otherwise, and be subject to the same liabilities as other stock. SECTION 21. If at any twenty-sixth or fifty-second meet- ing of the business year there shall be more money in the treasury than will satisfy the applications for loans, the board of directors may require any and all holders of certificates of paid-up stock, in the reverse order in which they were issued, to surrender such certificates and to receive therefor the 304 APPENDIX. amounts for which they were issued, together with all divi- dends declared and still remaining unpaid thereon, and no holder of such paid-up stock shall be entitled to dividends thereon from and after the time the board shall so order its surrender. Borrowing Members. SECTION 22. Every shareholder shall be entitled to a loan of .... dollars for each share subscribed, upon securing the same as hereinafter provided. SECTION 23. At each weekly meeting, at the discretion of the directors, precedence in borrowing such money as may be on hand for loan shall be offered openly for sale and be sold to the member who bids the highest premium therefor, which premium must be paid in weekly installments during the con- tinuance of the loan. SECTION 24. Interest and premiums on loans shall be pay- able pro rata as soon as any part of the loaned money is ready to be paid to the borrower. SECTION 25. Those who borrow money must make a de- posit of twenty ($20.00) dollars with the president to cover expenses to pay for appraisers', attorney's, and recorder's fees, etc. Any balance of this amount remaining after all fees are paid shall be returned to the owner. SECTION 26. The board of directors shall have the right to reject any and all applications for loans, having regard as well to the character of the applicants as to the security offered. SECTION 27. All loans shall bear interest at the rate of per cent, per annum, and shall be payable in weekly install- ments, and rebatable annually. Securities. SECTION 28. Any member borrowing money shall secure the payment thereof by executing a sufficient mortgage on real estate in , said mortgage to be in force until the dues paid in and the declared profits credited thereon shall amount to dollars per share, whereupon the mortgage shall be cancelled. SECTION 29. Security by mortgage upon real estate in fee simple, perpetual leasehold, or leasehold estate with the privi- APPENDIX. 305 lege of purchase after a certain period and at a fixed price, or leasehold for not less than years, shall be accepted at the discretion of the board of directors. SECTION 30. No loan shall be made for more than two- thirds of the appraised value of the mortgaged property ; and when the ground alone is not sufficient any buildings thereon must be insured to the satisfaction of the board of directors, and the policies assigned to the association as collateral se- curity. SECTION 31. All taxes and assesments, fire insurance pol- icies, ground rents, etc., must be paid promptly by the mort- gagor, and it shall be the duty of such mortgagor to present to the directors the proper receipts therefor at the meeting next following the date when such payments become due. Failure to present such receipts as required shall be liable to a fine of , and such other action as the board of directors may deem necessary. SECTION 32. Every member who borrows money on mortgage security and transfers to the association the policy or policies of insurance on the improvements of said mort- gaged premises as collateral security, who shall contemplate making any alteration in or addition to the insured buildings, that may in any way impair, or tend to impair, the validity of such insurance policy, or policies, shall report the same at a regular meeting, before the beginning of such change, and in default thereof shall be fined in the sum of for each and every such omission. Collateral Securities. SECTION 33. Any member of the association to whom money has not been advanced on mortgage security may re- ceive a loan in any sum not exceeding nine-tenths of the amount paid in by him, on giving a note for such amount, and transferring his pass book to the association, to be held as collateral security until the full amount of such loan, with all dues thereon, shall be paid. SECTION 34. Any person borrowing money as provided in the foregoing section, shall pay for the same in weekly install- ments as follows : 306 APPENDIX. For any sum from $ i oo to $ 25 oo cents per week. " " " " 25 oo to 5000.... " " " " " 50 oo to 75 oo. ... " " " " " 75 oo to loo oo. . . . " and so on at the rate of cents for every twenty-five dol- lars or part thereof. SECTION 35. The members so borrowing shall continue to pay their dues and interest on the shares subscribed, the same as other borrowing or depositing members. SECTION 36. In case any such borrowing member shall have failed to return the amount borrowed and the weekly dues and interest thereon at the expiration of one year, his pass book shall be forfeited to the association, his member- ship aficelled, and the sum of money loaned, the unpaid weekly installments thereon, and fines for the non-payment of dues, shall be deducted from the full amount of dues paid in, and the balance paid to such person, whose connection with the association shall thus terminate. Fines and Penalties. SECTION 37. Any member who has borrowed money on mortgage security from the association, who shall neglect to make any of his payments for the space of weeks, shall be liable to an action at law for the recovery thereof, and the directors shall be authorized by virtue of the mortgage deed to collect all dues, interest, premium, and fines due and owing the association. SECTION 38. If any member neglects to bring his pass book to the weekly meetings, or to pay dues at the specified time, he shall be fined SECTION 39. The board of directors shall have the power to remit any fine which in their judgment has been unjustly imposed. SECTION 40. In case the secretary should be unable to at- tend the meetings he shall be required to deliver or cause to be delivered the books and papers of his office to the finance committee, subject to a fine of for each offense. SECTION 41. If a member of the board of directors be ab- sent from three consecutive meetings without leave or proper excuse, then the place may be declared vacant, and the board may fill the vacancy. APPENDIX. 307 Cancellation of Mortgages. SECTION 42. If any member desires to cancel his mortgage to the association he may do so by paying to the association the amount due on the mortgage as follows : The face value of the mortgage ($ per share), the premium remaining due and unpaid for the term of one year, the interest remaining unpaid, and all fines for non- payment of dues, less the dues paid in and the profits credited, and also a fee of to the president for cancelling the mortgage. Dividends. SECTION 43. The board of directors shall, on the day of. ...... and .... of each year, declare such dividends as may remain from the earnings of the association, after deduct- ing therefrom all expenses and losses, and such sum as they may reserve for the fund for the payment of contingent losses. SECTION 44. The dividend so declared shall be distributed amo4ig all the members pro rata in proportion to the amount standing to the credit of each member on his stock at the be- ginning of the term, in addition to the average amount paid in by him during the time, less withdrawals. SECTION 45. At the time of issuing paid-up stock the board of directors may limit the rate of dividends which shall be paid thereon, and the rate to which the same is limited shall be written or printed on the back of the certificate. SECTION 46. The dividends declared shall be credited on the pass books of the members at the first meeting in and of each year, and holders of certificates of paid- up stock shall be entitled to receive the dividends thereon in cash, on the of and at the office of the association. Withdrawals. SECTION 47. Depositing members may withdraw from the association at any time by giving one week's notice to the board of directors, and the liability to pay further dues and the right to dividends shall cease with such notice. The with- drawing member shall be entitled to receive all payments made 3 o8 APPENDIX. on the stock withdrawn, and all dividends declared thereon up to the time of notice, less his pro rata share of all losses. Provided, however, that should the applications for with- drawal at any time exceed the weekly receipts, such appli- cations shall be filed in the order in which they are received, and paid in the order in which they are filed, as fast as the re- ceipts of the association will pay them. SECTION 48. All shares withdrawn or forfeited, and all shares paid up and the money thereon withdrawn, and also all shares on which, loans have been taken and cancelled or paid up, shall revert to and become the property of the associ- ation and may be reissued by the board of directors. SECTION 49. Members who have borrowed money on real estate may transfer their shares by selling and transferring their mortgaged property and shares to one and the same per- son, on the condition that the purchaser becomes a member of the association by signing the constitution and agreeing to perform all the duties of the seller. SECTION 50. Any member to whom money has not been advanced on mortgage security may withdraw any part of the amount to his credit on the books of the association, and upon the amount so withdrawn he shall not be required to pay any interest, and he shall not receive any dividends on said with- drawn amount. Death of Members. SECTION 51. Upon the death of any member his legal representatives shall be invested with all his rights and liabil- ities. Amendments. SECTION 52. These by-laws may be amended at any reg- ular meeting of the board of directors by a two-thirds vote of the members thereof, but all proposals to amend the same shall be made in writing at a regular meeting of the board at least one week before action is taken thereon. APPENDIX. 309 RULES. In order that the members may at all times be informed as to the proper rotation or order of business, and, partic- ularly for the convenience of the directors themselves, the directors should adopt a set of rules for governing the business of the association. These should be prepared carefully and changed and amended from time to time as may be found necessary in order to make them more practicable and popular among the members. Since such rules must be arranged to suit local conditions and circumstances it is not possible to outline them very specifically in a general work of this char- acter. The object of the business rules of an association and the policy of the directors should be to have the business so arranged that it will run along smoothly and rapidly with- out friction or delay, so that members may not be annoyed by having to wait. At the same time the meetings should be made of as pleasant and sociable a character as possible so as to be enjoyable to members and visitors. Particular pains should be taken by the directors to make tlje meetings suitable and pleasant places for ladies to visit, for quite a number of ladies become members of associations. A few specimen rules are given below which will be found suggestive : i. At the specified time for the collection of dues the president shall call the meeting to order, and the secretary and his assistants and the members of the finance committee shall take their respective places. 3 io APPENDIX. . 2. The secretary or an assistant shall enter all dues paid in in the Dues Register and the members of the finance committee shall count all moneys and receipt for them.*' 3. When the time for receiving money has expired the secretaries and the finance committee shall count the receipts and check up the books to see if the receipts and entries cor- respond. As soon as this is done they shall report to the pres- ident that they are ready to proceed with the further business of the evening. 4. The following shall be the order of business for the directors' meeting : (r) Call to order. (2) Roll call. (3) Reading of minutes. (4) Sale of money.! (5) Reports of officers and committees. (6) Unfinished business. (7) Miscellaneous and new business. (8) Reports of receipts and disbursements. (9) Adjournment. *In some associations the rule is that an assistant secretary, or a mem- ber of the finance committee, shall make the entries in the Dues Register, and the secretary himself shall attend to issuing books to new members and other miscellaneous business of that kind, and particularly to giving information and answering the numerous questions that are always being asked by members in an association. During the time of receiving dues the directors who are not officers or members of the finance committee should make themselves useful by cir- culating among the members and visitors present, making them ac- Suainted with one another, giving information in regard to the associa- on and its work, and making the meeting as pleasant and attractive as possible. tThe sale of money should be placed as early as possible on the order of business so as not to keep members waiting too long. The directors' meeting does not begin until after the time of receiving dues has expired. Members who come early in the evening, in time to pay their dues, and are then compelled to wait until the directors transact all other business before they can bid on money, find the delay very irksome and annoy- ing. INDEX OF SUBJECTS. A. ACCOUNT BOOKS. p age. General suggestions concerning, 283 ADMINISTRATOR. May exercise same rights as principal, 75 May continue membership of deceased member,. . . 88 ADMISSION. By-law concerning, 303 Payment of may be essential to membership, 76 AGENTS. Powers and liabilities of, 129 AMENDMENTS. To by-laws, 308 To constitution, 299 AMERIKANISCHER DARLEHEN UNO BAUVEREIN. First building association in the United States, 25 APPRAISING COMMITTEE. See Committees. ARTICLES OF INCORPORATION (OHIO). See Incorporation. ASSETS. Classification of, 191 ASSESSMENTS. By-law providing for payment of, 305 Mortgagors liable for on mortgaged property, 150 ASSIGNEE. Of member may exercise same right as principal, . . 75 ASSIGNMENT. Of stock to association, 75 ASSISTANT SECRETARIES. Employment and duties of, no (3H) 3 I2 INDEX. ASSOCIATION. Page. See Building and Loan Associations. ATTORNEY. Appointment, duties, and compensation of, 115 Form for report of, 271 AUDITORS AND AUDITING. Assistance from officials 173. Certificate, 198 Change of, 174 Compensation of, 175 Diagrams, 182 Disqualification of, 172 Errors of omission, 181 False accounts, 180 General considerations,. 157 Protection of corporate interests, 162 Purposes of, 160 Qualifications of, 168 Representative of members, i67 Selection of, 168 Special hints, 177 Special reports of, 192 Uniformity of methods impossible, 176 Withdrawals, 189 B. BALANCE SHEET. Form for, 279 Nature and purposes of, 166 BEUZER, CHARLES. Dividend tables, 242 BLANK FORMS. Necessity for, 120 See Forms. BLANKS. See Account Books. BONDS OF OFFICERS. By-law concerning, 301 Form for (Ohio), 260 Necessity for and amounts of, 119 BOOK ACCOUNT. Form for, 285 INDEX. 313 BOOKS AND BLANKS. pa s e - Care of, 177 General suggestions concerning, 283 General Ledger, 190 Members' Ledger, 187 Necessary for an association, 291 Secretary's cash book, 187 Treasurer's cash book 187 BORROWERS. As members, 89 Duties of, 89, 93 Rights of, 89, 93 BORROWING MONEY. See Loans. BROOKLYNER GEGENSEITIGER DARLEHEN UND BAUVEREIN. Organization of, 26 BUILDING AND LOAN ASSOCIATIONS. Advantages of, 21, 28 As corporations, 162 By-laws, 63 Capital stock, 61 Choice of name, . . . 60 Constitutional requirements, 62, 164 Dissolution of, 132 Early history of, 23 Economy and simplicity necessary, 165 Future of, 33 General powers of, 127 Government of, 99 Headquarters, . . 65 How to organize, Incorporation of, In the United States, 25 Leagues 45 Meetings of. 67 Members : duties and rights of, 76 " National ", 41 Perpetual, 39 Perpetual succession, 127 Powers and liabilities of, 127 Serial, ... 36 Special powers of, 131 Statistics of i56 Statutory requirements, 164 Terminating, 35 See Building Societies. 314 INDEX. BUILDING ASSOCIATION SUPPLIES. Page. List of, 291 BUILDING SOCIETIES. Origin and growth in Great Britain and Germany, . . 18 BY-LAWS. Form for, 300 Scope of, . . , 6-* See Rules. c. CAPITAL STOCK. See Stock. CASH BOOK (SECRETARY'S). Auditing of, 184 Description of, 187 Diagram, . . '. 188 CASH BOOK, (TREASURER'S). Description of, 187 CERTIFICATE OF PAID-UP STOCK. Cost of, 303 Form for, 272 May be called in by directors, 303 When and to whom issued, 303 See Paid-up Stock. CERTIFICATE OF STOCK. Form for, 287 COLLATERAL SECURITY. By-laws concerning, 305 Character of, 95 Insurance policies as, 148 Liability of, 74 Sale and disposition of, 96 Stock as, 96 COMMITTEES. Appointment of, 302 Appraising, duties of, 97, 302 Auditing, duties of, 156, 176, 302 Compensation of, 302 Finance, duties of, 302 CONSTITUTION. Form for, 297 Scope of, 62 See Rules. CONTINGENT FUND. See Reserve Fund. INDEX. 315 CONTRACTS. Pa * e - Powers and liabilities of association in 129 CONTRIBUTION BOOK. Diagram (13 week), 185 Diagram (12 month), 186 CO-OPERATION. Abroad, 18 Defined, 15 In the United States, 19 Necessity for, 45 CO-OPERATIVE SOCIETIES. Conditions necessary for, 16 History of, 15 In England and Germany 18 In the United States, 19 Origin of, '. 15 Varieties of, 17 CO-OPERATIVE STORES. Plan of, 17 CORPORATE MEETING. Character and powers of, 99 General meetings, 100 Management of, 102 Special meetings, 101 CORPORATE SEAL. Description and purpose of, 128 D. DAVIS, W. L. Dividend tables, 200 DECEASED MEMBERS. By-law concerning, 308 Disposition of stock of, 88 See Administrator. DEFAULTERS. Entitled to certain credits, 74 DEPOSIT ENVELOPE. Form for, 288 DEPOSITORS. As members, 76 DEPOSITS. Table of, 138 3 i6 INDEX. DEPOSIT SLIP. Page. Form for, 289 DIAGRAMS. Cash-book 188 Individual Shareholder's Ledger, 183 Secretary's Contribution Book 185 DIRECTORS. Duties and responsibilities 78, 84, 90, 95, 96, 104, in, 113, 119, 120, 121, 122, 129, 299, 301, 304, 306 Pay of 122 DISSOLUTION. Conditions and methods of, 132 Constitutional provisions for, 300 DIVIDENDS. By-laws concerning, 307 Calculation of, 197 Form for envelope for, 151 Form for receipt for, 152 Form for warrant for, 152 Must be allowed to withdrawing members, 308 On paid-up stock, 303 Payment of discussed, 150 Payment of, on advanced dues, 77 Provisions for in statutes and rules, 84 Tables of System 1 200 Tables of System II, 225 Tables of System III, 242 DUES. Accumulated, may be credited on loans 74 Arrangements for receiving of, 153 Back payments not required, 76 Begin from time of subscription, 76 By-law concerning payment of, 303, 306 Defaulters entitled to credit for accumulated, .... 74 Definition of, 70, 84 Form for deposit envelope for, 288 Form for deposit slip for, 289 Form for receipt for, 288 May be collected by suit, 74 May be paid in advance, 77 Not to be credited as paid upon loans, 74 Regular payment of essential, 78 Stock liable for, 74 DUES' BOOK. See Contribution Book (Secretary's.} INDEX. 317 K. ELECTIONS. Pa * e - Constitutional provisions for, 106 General discussion of, 106 EXECUTOR. See Aministrator. K. FEES. Admission, 76, 33 Deposit for required, .... 34 For cancelling mortgage, 307 FINANCE COMMITTEE. See Committees. FINES. How and for what imposed, 78 FORECLOSURE OF MORTGAGE. Disposition of proceeds, 96 FORFEITURE OF STOCK. Conditions of, 78 FORMS. For Articles of incorporation (Ohio), 257 For attorney's report, 271 For bond of officers, (Ohio), 260 For book account, 285 For certificate of paid-up stock, 272 For collateral note for pass-book loan, 270 For deposit envelope, 288 For deposit slip, 289 For dividend receipt, 152 For dividend warrant, 152 For mechanic's lien (Ohio), 270 For mortgage clause for insurance policies, 267 For mortgage collateral note, 269 For mortgage (Kentucky), 264 For mortgage (Ohio), . 261 For pass-book, 287 For proxy on stock 259 For recording and cancelling of mortgage, 146 For relinquishing insurance policy, 149 For report of auditing committee, / 193 ' For secretary's balance sheet, 279 For stock subscription list, 259 3 i8 INDEX. o. GENERAL MEETINGS. See Corporate Meeting. GENERAL POWERS. Of associations, 127 Of officers, 106 ti. HEADQUARTERS. Selection of, 65 I. INCORPORATION. Form of article of (Ohio) , 257 Methods of, 64 INSURANCE POLICIES. As collateral security, 148 By-laws concerning, 305 Filing of, . . 148 Form for relinquishment of, . 149 Premiums on must be paid by mortgagors, 148, 305 Recording of, 148 INTEREST. By-laws concerning, 304, 305 Calculation of, 197 Nelson's method of calculating, 250 Tables, 201, 226, 244, 252 INVESTORS. Rights of, 83 K. KOERNER, GUSTAV. Gives origin of buiding associations in United States, 25 L. LEAGUES. How to form, 46 Membership in, 48 National league, 50 Necessity for, 45 LEASEHOLDS. Recording of when mortgaged, 150 Work of, 47 INDEX. 319 LEDGER (MEMBER'S). Page- How to check, 187 LEGISLATION. In England, 53 In the United States, 56 Necessity for, 57 New effects of, 67 LIABILITIES. Classification of, 191 LIEN. Form for mechanic's, ... 270 On stock for arrears, 74, 78 LITIGATION. Camses of, 57, 130 See Suits. LOANS. Accumulated dues applied to payment of, 74 Advantages of, 143 Amount of, 87, 135, 304 By-laws concerning, 304 Cost of, 136 For what purposes, 135 In installments, 137 Interest on, 304 Nature of, 90, 92 Premium on, 304 Purposes of, 135 Repayment of, 137 Security required, 136 Tables, 138 The time required for payment of, 138 Who may borrow, 134 M. MECHANIC'S LIEN (OHIO). Form for, 270 MEETINGS. Business, 67, 302 Constitutional provisions concerning, 298 Corporate, 99 Directors', 299 General, TOO Special, 101 320 INDEX. MEMBERS. Pa & e - Classes of, 75 Corporate rights of, 81 Duties of, 77, 89 Protection of, 163 Relations of to association, 81 Rights of as borrowers, t 87 Rights of as investors, ' 83 Withdrawal, 84 MEMBER'S BOOK. See Pass Book. MEMBERSHIP. Conditions, purposes, privileges, and liabilities of, . 76, 77 Constitutional provisions for, 297 MORTGAGE CLAUSE FOR INSURANCE POLICIES. Form for, 267 MORTGAGE COLLATERAL NOTE. Form for, . 269 MORTGAGE (KENTUCKY). Form for, 264 MORTGAGE (OHIO). Form for, 261 MORTGAGES. By-laws concerning, 304 Cancelling of, 147 Custody of, 146 Foreclosure of and disposition of proceeds, 96 Forms for recording and cancelling of, 146 On leaseholds, 150 Purpose and features of, 94 Recording of, 146 MORTGAGORS. Duties of, 150 MUTUAL HOME AND SAVING ASSOCIATION, THE, DAYTON, OHIO. Report of. 281 N. NAME. Choice of, 60 Constitutional provision for, 297 NELSON, R. Method of calculating interest, 250 "New Bookkeeping", 283 INDEX. 321 o. OFFICERS. Bonds of, .......... .............................. 119 By-laws concerning, ....... ..................... 300 Constitutional provisions for, .................... 299 Election of, .......................... ... 104, 106 General powers of, .............................. 104 Re-election of, ............... .................... 107 Remuneration of, ............................... 120 Responsibilities of, .............................. 119 Selection of, ........................ ..... 65 Those required, ............................... ... 106 ORGANIZATION. By-laws, ........................................ 63 Capital stock, ................................... 61 Choice of name, .................................. 60 Constitution, ................................ ..... 62 Headquarters, ............. ...................... 65 Incorporation, .................................... 64 Meetings, . . ........................ . ........... 67 Officers, .......................................... 65 Preliminary steps, .............................. 59 PAID-UP STOCK. By-laws concerning, ........................ .... 303 Defined, ....................................... 71 Form for certificate of, ........................... 272 Liabilities concerning, ........................... 153 Table : time required to pay up share, ............. 141 When certificates of may be issued, .............. 71, 77 PASS-BOOK. Cost of, ............. .............................. 303 Description of, .................................. . . 286 Forms for, ...................................... 287 Possession of essential to membership, ............ 76 Prima facie evidence of membership, .............. 77 PERPETUAL ASSOCIATIONS. Plans and advantages of, ......................... 39 PERPETUAL SUCCESSION. Essential to purposes of associations, ............ 127 PREMIUMS. By-laws concerning, ............ : ................. 304 Definition and purpose of, ........................ 91 322 INDEX. PRESIDENT. Page. Duties of, 108, 146, 300 PROFITS. Application of, 198 Disposition of undivided, 145 Illustration, 193 See Dividends. PROXY ON STOCK. Form for, 259 R. REAL ESTATE. Appraisement of, 97 RECEIPT BOOK. See Pass Book. REPORTS. Form and preparation of, 273 Legal requirements concerning, 275 Preparation and publication of, 277 Secretary's duties concerning, 278, 301 Specimens, 280 REPORTS (SPECIMEN). Mutual Home and Saving Association, The, Day- ton, Ohio, 281 Seventeenth Ward Building and Loan Company, The, Cincinnati, 282 RESERVE FUND. Nature and purpose of, 144, 303 RULES. For order of business, form for, 310 For directors' meeting, 309 Must be explicit, . . 57, 62, 63, 70, 74, 78, 84, 85, 87, 90, 92, 94, 96, 101, 102, 104, 106, 108, in, 120, 121, 122, 127, 129, 131 See By-laws and Constitution. s. SALARIES. Of officers, 118, 120, 122, 125, 301 SALE OF MONEY. Purpose and manner of, 90, 304 SALE OF SECURITIES. See Security. INDEX. 323 SCHMOELE, DR. WILLIAM. Page. Founder of building associations in the United States, ... 25 SECRETARY. Duties of, 109, 148, 150, 277, 301 Salary of, 1 25 Subject to fine, 306 See Assistant Secretaries. SECRETARY'S BOOK. See Cash Book (Secretary's.} SECURITY. Assignment of stock as, 96 By-laws concerning, 304 Collateral, 95 Mortgages as, 94 Nature of, 135 Sale of and disposition of proceeds, 96 See Mortgages. SERIAL ASSOCIATIONS. Described, 36 Division of profits in, 253 SEVENTEENTH WARD BUILDING AND LOAN COM- PANY, THE CINCINNATI, Report of, 282 SHAREHOLDERS. See Members. SHARES. See Stock. SIMPLE INTEREST. See Interest. SMITH, HENRY L. Dividend tables, 223 "SPARKASSE." Reference to, . . 18 SPECIAL MEETINGS. Provisions for, 101, 299 SPECIAL POWERS. Of associations, 131 STATE SUPERVISION. Necessity and provisions for, 195 STATISTICS. Estimates, 156 Necessity for 52 Provisions for, ] 195 3 2 4 INDEX. STOCK. Amount of, . . 61, 297 Amounts of held by one subscriber, 68, 297 As property, 69 Assignment of as collateral security, 96 By-laws concerning. 303, 307 Constitutional provisions concerning, 297 Definition of, 68 Dues on, 70 First liability falls upon, 74 Forfeiture of, 78 Forms for subscription list for, 259 Form for transfer, '. 287 Increase of, 69 In perpetual associations, 39 In serial associations, 36 In terminating associations, 35 Liability of for loans, .... 74 Miscellaneous facts concerning, 74 Paid-up, 71, 77, 141, 153, 272, 303 Reversion of to association, 307 Subject to lien, 74, 78 Subscription to necessary before incorporation .... 68 Table snowing time required for maturing of, 141, 142 Transferable, 70 Transfer of upon books of association, 303, 308 STOCK BOOK. See Dues Book and Pass Book. STOCKHOLDERS. See Members. STOCK PAYMENTS. See Dues. SUBSCRIPTION LIST. Form for, 259 SUITS. Powers and liabilities of associations in, 130 See Litigation. T. TABLES. Deposits, 138 Dividends, 197 Interest, 197 Loans, 138 INDEX. 325 TAXES. Pa * e - By-law providing for payment of, 305 Mortgagor liable for on mortgaged property, . 150 TERMINATING ASSOCIATIONS. Plan and disadvantages of, 35 TITLES. Fees for examination of, 304 TRANSFER OF STOCK. See Stock. TREASURER. Duties of, no TRUSTEES. Duties of, 113 U. UNDIVIDED PROFITS. Disposition of, 145 UNION BUILDING SOCIETY, GREENWICH, ENGLAND. Allusion to, 53 V. VICE-PRESIDENT. Duties of, 108 w. WITHDRAWAL. By-laws concerning, 307 How to check up, 189 Right, conditions, and method of, 84 RETURN TO the circulation desk of any University of California Library or to the NORTHERN REGIONAL LIBRARY FACILITY Bldg. 400, Richmond Field Station University of California Richmond, CA 94804-4698 ALL BOOKS MAY BE RECALLED AFTER 7 DAYS 2-month loans may be renewed by calling (510)642-6753 1-year loans may be recharged by bringing books to NRLF Renewals and recharges may be made 4 days prior to due date. 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