Triumphs and Wonders of the 19th Century: The True Mirror of a Phenomenal Era / A volume of original, entertaining and instructive historic and descriptive writings, showing the many and marvellous achievements which distinguish an hundred years of material, intellectual, social and moral progress

by James P. Boyd

II. THE SYSTEM.

For convenience, “a share” is the payment of $1.00 a month, five shares $5.00, and so on. The final value of a share is arbitrarily fixed at $200. The money received is promptly loaned to the members, on which the borrowers pay $1.00 per month interest on every $200 borrowed, until the final value of $200 is reached, which occurs in twelve years or less.

Payments	$144.00
Gains	56.00
Final value	$200.00

A member may have borrowed $2000 from the association on ten shares of stock ($200 being the limit loaned on each share), and the shares having matured, or become worth $2000, his loan of $2000 is canceled and his home is free. The member who has not borrowed receives $200 in cash for every share he holds.

The building association in its simplest form, and as it existed in Philadelphia for many years, took all its members in at one time, and the members paid from $2 to $20 each every month until the shares matured. At maturity all the borrowers received canceled mortgages, and the non-borrowers cash for their shares, and the society then closed its affairs. Hundreds of such associations have wound up their affairs successfully.

Very many associations are now working on the permanent plan; that is, they admit new members every six months or every year, the first set being the first to mature, and so on, one set going out every year and a new batch coming in.

Each series is a separate association so far as the dues are concerned, but the total gains are divided so as to give each dues dollar invested a like rate per cent per annum for the time of investment. There is really no positive or final division of profits. The gains are kept in a lump sum, and the division is on paper only for the purpose of showing the progress made towards maturity. When a set of shares matures, its portion of the gain is taken from the accumulated profits and divided to the stock that has reached its final value.

Some associations count all the loans as assets and all the dues and gains as liabilities. In such societies the borrower pays interest on his full loan until the end, and gets credit for profit on his dues until one account cancels the other.

Other associations, at the end of each year, deduct the dues paid in from the loans and charge interest on the net amount only of the loan. By the latter system the borrowers’ payments decrease every year, but it requires a longer time to finally cancel the loan than by the former system.

When there is a demand for money, and more than one member is anxious to secure it, the funds are offered at auction, and the member who bids the highest premium secures the prize.

The bidding is generally done by offering so many cents per share per month above the required interest. If a member secures $2000 at 10 cents per share premium on ten shares, his monthly payments are:—

Dues per month	$10.00
Interest per month	10.00
Premium per month	1.00
Total	$21.00

These payments continue until the shares mature. The dues are the contributed capital, and the interest and premiums are the gains.