IV. AMERICAN ASSOCIATIONS.
There is no evidence other than that Frankford, now a part of Philadelphia proper, saw the first building society that was organized in the United States. It was called the “Oxford Provident Building Association,” and was started in 1831, sixty-eight years ago. It closed its affairs in June, 1841. The second Frankford society, of the same name, was organized in February of 1841, and ran out in August, 1852. Isaac Whitelock was president, Samuel Pilling treasurer, and Isaac Shallcross secretary, of the first association; and Henry Taylor president, Isaac Shallcross secretary, and William Overton treasurer, of the second association.
The Holmesburg Building Association was organized in January, 1842, and closed its business satisfactorily to the members, June 25, 1853. John B. Duff, a lumber counter by trade, was instrumental in organizing the first building society within the compactly built up city of Philadelphia, in the year 1847. The name of the society was the “Kensington Building Association.” The society issued five hundred shares of stock in one series, and wound up its affairs in ten years and two months after it was organized. The first advertisement of any building and loan association, so far as can be ascertained, appeared in the Philadelphia “Public Ledger,” February 5, 1847, and called for a meeting of the “Kensington.” Mr. Duff died in 1883, and a few months before that event he presented to the writer a document now known as “The Old Yellow Poster.” It is the call for the first building society in Old Philadelphia, a copy of which is herewith presented.
Mr. Duff seldom, if ever, held forth in public, but his efficient work was done by taking individual cases and converting them to the benefits of obtaining homes for themselves. Frequently he has been seen on a pile of lumber with chalk in hand, demonstrating a problem in building society arithmetic to converts to this system of saving.
MEETING!
KENSINGTON
BUILDING ASSOCIATION
The Subscribers being desirous of forming an Association for the purpose of assisting the members thereof in the erection of Dwelling Houses, or such other Real Estate as they shall deem most advantageous, have concluded to hold a Meeting for that purpose
ON FRIDAY EVENING, 22D JAN’Y, 1847,
AT 7 O’CLOCK,
At the Kensington Engine Hall,
On Queen Street, above Marlborough St.
Where the objects of the Association will be laid before the Meeting. Citizens generally, are invited to attend.
Ralph Pilling,
Joseph Smith,
John Bierly,
John B. Duff,
Henry Shermer,
John Verdear,
Samuel Wensell,
Samuel T. Hay,
Henry Lane,
Howard Bowman,
Andrew Himes,
Rich’d. Fordham,
David Guyant,
Geo. Fordham,
Henry Kriener,
Abr. P. Eyre,
Ed. W. Gorgas,
Alfred Fitler,
Alb’t T. Eggleton,
Albert Engle,
And. Flanders,
Thomas Bennett,
J. R. Fullerton,
Charles Tryon,
Samuel Parcels,
Edward Owens,
Jacob Jones,
John Nevling,
Henry Mosser,
Geo. Kennerd,
Henry Mercer,
George Mattis,
Michael Collar,
Edward Wester,
Henry Miller,
William Ellis,
John Hearney,
Jos. B. Matlack,
Saml. Biedaman,
J. Shilingburg,
James Hill,
George Cramp,
George Coleman,
John Fordham.
January 21, 1847.
Printed at Boyle’s cheap Printing Establishment, corner of Second and Brown streets.
CALL FOR FIRST BUILDING ASSOCIATION IN PHILADELPHIA.
There has been scarcely a great mind in the country that has not moved the lips to say some good word for the building society cause. Henry Ward Beecher in a sermon said,—
“I think that a young man who places before himself not a speculation, not a fortune, but some object that he means to achieve, who selects a particular piece of property that he would like to own, and aims steadily at acquiring it and works diligently for it, and saves for it, will be almost sure to succeed. I will say that every young man in a city, either through the instrumentality of a building association when there is one, or independently, when such an association does not exist, and when at last, having toiled and waited patiently, the debt is paid and the piece of property is earned, is a great deal richer than the assessor knows him to be. The assessor goes around and puts a valuation upon his property for the purpose of taxing it. But, ah, those habits of industry and self-control; those wise measurings, which we call economy,—all these the man has gained over and above the property. He has saved himself from a thousand temptations. He has protected himself against remorseless vices, which would have gnawed out his marrow. And though you call it merely amassing property, it may be amassing manhood. It is one step on the upward way.”
State officials who closely examine the workings of these societies never seem to tire in their praise. Superintendent Kilburn, of New York, in his last annual report, refers to the conservative and honestly managed building association as follows:—
“During the past year associations of this class alone have returned to withdrawing members dues and profits amounting to $8,014,039. During the same period no less than fifty-seven associations were engaged in the payment of matured shares, and $829,752 were paid to members who had faithfully continued payments through a series of years, and at last saw their confidence justified. But these sums are of small consequence when we consider the comfortable homes that have been erected, and the families that have been permanently and comfortably housed through the facilities for frugality and thrift, for self-denial and saving afforded by them. My attention was recently called to a village of the State in which it was said that nearly one-third of the houses had been erected through the agency of a small local association.
“Nor is this an exceptional case, unless the element of proportion be taken into consideration. In nearly all the cities of the State, and in many of the large villages, there are associations that are models of their kind, and are worthy of the admiration and support of every good citizen.
“Their educational influence, too, can hardly be over estimated. The workingman who joins such an association takes part in the administration of its affairs and learns his first lesson in finance from those of larger experience, and, who perhaps, touches elbow with the lawyer, the merchant, and the minister as they discuss the safety of an investment, or proper amendment to the articles of association, and will not lend a ready ear to teachers of socialism, of class hatred, or of financial heresies.”
As shown elsewhere, the members of the New York societies have over $37,000,000 invested. The Building Association League of Pennsylvania, an organization of twenty-six years’ standing, composed of the most active associations in the State, some years ago proclaimed a “Declaration of Principles,” from which we quote:—
“The local building societies of the State of Pennsylvania are true coöperative organizations, transacting no business with the public, and not amenable to laws affecting financial institutions that have dealings with the public. They encourage thrift among the wage-workers, help to create taxable property in its best form—real estate, educate their members in business methods and teach them both how to save and how to invest money.
“By this service they have created a state police of tens of thousands of home owners, more efficient for the protection of life and property than a standing army.
“They have lessened the cost for the maintenance of alms-houses, prisons, and asylums, by teaching men and women to be self-helpful and self-reliant, and in that way have benefited the State to an amount far exceeding any sum that could be gathered by taxation.
“The work of the societies is done gratuitously by the directors, and in no other way could they be maintained, the profits resulting from the services of men who, though they have never posed as philanthropists, are engaged in the best kind of charity, helping men and women who help themselves.”
Joseph H. Paist, a prominent Philadelphia building association expert, has been president of the league since it was organized.
Other States have leagues, and they are all combined as a National League, whose motto is “The American Home is the Safeguard of American Liberty.”
At certain intervals the national government, States, cities, and hundreds of industrial enterprises distribute earnings and accrued interest to those entitled to the same. The vast sums of money drawn out of thousands of banks and banking institutions represent millions of dollars of canceled debts. Within a few days after these distributions take place, at least nine tenths of this money finds its way back into the strong boxes that parted with it. One tenth of the money is, perhaps, held in the pockets of the people, to be gradually disbursed for current needs until the next pay arrives. I do not remember having received a statement or statistical report referring to the building association share in these distributions.
True, there are no set dates for building societies to part with money, but in Pennsylvania alone these coöperative companies distribute $20,000,000 annually in matured shares and withdrawals. This is no insignificant sum. To-day their accumulated wealth (mostly savings of people in the humbler ranks of life) is over $107,000,000, and in the United States fully $600,000,000. The annual outgo for canceled shares is about $100,000,000, or fully $8,000,000 every month.
Since these associations were organized, quite one thousand five hundred million dollars have been returned to the members in the value of homes clear of debt and in cash for withdrawn and matured shares. Despite these vast disbursements, there has been a gradual increase in their assets from year to year.
Beginning with one association in 1831, their number increased in a small way until probably not over two hundred societies existed in 1800. From that date until the present moment it is estimated that over 8000 have been organized throughout the land, increasing at a rapid rate every year, and leaving at present, after closing out a great number, nearly 5000 active associations distributed among the States as follows:—
| States. | No. of Societies. | Membership. | Assets. |
|---|---|---|---|
| Pennsylvania | 1200 | 300,000 | $111,714,871 |
| Ohio | 761 | 297,787 | 99,770,161 |
| Illinois | 682 | 180,000 | 73,309,192 |
| New Jersey | 300 | 116,739 | 41,038,934 |
| Indiana | 492 | 137,510 | 37,624,418 |
| New York | 317 | 102,902 | 37,385,642 |
| Massachusetts | 123 | 65,419 | 24,507,843 |
| Missouri | 255 | 49,462 | 22,497,700 |
| California | 138 | 19,153 | 17,938,100 |
| Iowa | 87 | 25,000 | 6,594,778 |
| Michigan | 70 | 20,497 | 6,495,307 |
| Minnesota | 69 | 9,000 | 4,260,666 |
| Tennessee | 34 | 6,166 | 3,771,354 |
| Nebraska | 68 | 11,821 | 3,554,788 |
| Connecticut | 15 | 11,208 | 3,243,935 |
| Maine | 33 | 8,230 | 2,912,963 |
| Other States | 228 | 281,284 | 104,320,367 |
| Totals | 4872 | 1,642,178 | $600,941,019 |
It is estimated that of the above named membership over 325,000 are women. Of the $600,000,000 of assets, at least $100,000,000 is a gain credit to the sharer. It is believed that an average of at least three members of a family contribute toward the payment of the dues and interest, and although seventeen hundred thousand names are on the books, nearly five million persons actually contribute.
These societies have done more to teach the people practical thrift than any known device ever promulgated. Thrift is described as “good husbandry, economical management in regard to property, success and advance in the acquisition of property, increase of worldly goods, vigorous growth, as a plant.”
“He is a good wagoner that can turn in a little room.”—Bishop J. Hall.
“Economy is the parent of integrity, of liberty and of ease, and the beautiful sister of temperance, of cheerfulness and health. Without economy none can be rich, and with it few can be poor.”—Dr. Johnson.
While these literary economical truths proclaimed in all ages by wise men, which they themselves very seldom knew how to put into practical use, have no doubt caused millions to think and wonder how to do it, they, altogether, have not built half as many rounds in the practical ladder of “thrift” as the poor workingman who successfully induces his next door neighbor to save one dollar a month out of his waste money, and with it subscribe for one share of stock in a well-managed building society. Building society advocates have done much inducing, but always in a practical way. They have not merely proclaimed that “economy is wealth;” that “the best security for civilization is the dwelling,” but they have taken the arm of their friend and neighbor and have led him to the society meeting-room and shown him just how they saved their own money. They have also taken them into their own homes and told them, “This is my own home, paid for, or nearly so, through the aid of the building society.” In this way lessons in the practical benefit of thrift are daily given.
“Examples demonstrate the possibility of success,” said Colton many years ago.
Alexander Dumas brought the matter home to the door of every man when he said, “All the world cries, ‘Where is the man who will save us? We want a man!’ Don’t look for this man, you have him at hand. This man—it is you—it is I—it is each of us.... How to constitute one’s self a man? Nothing harder if one knows not how to will it; nothing easier if one wills it.”
It would seem that building society advocates were created to teach men how to will it. In this line of work they have certainly been eminently successful. To what class of citizens do these advocates belong, good, better, or best? In the early history of these associations they were organized and almost wholly managed by mechanics and laboring men; managed honestly, conservatively, and successfully; and to this “class” belongs the honor of organizing, conducting, and carrying to a point of magnitude and usefulness, that commands the admiration of financiers the world over, the building societies as conducted in Pennsylvania and other States.
The honest, thrifty home-seeker has proved himself to be the “best” citizen so far as managing a building society is concerned. When failures have occurred, the main causes have been the introduction into the management of financial ideas emanating from the brains of theoretical bankers and literary economists.
The man who works at the bench mending shoes has a better idea of what a dollar will do than the man who has at his command hundreds of thousands of dollars belonging to other people, but who never was blessed with the necessity of earning a real dollar by his own labor. The conservative building society is one of good common sense and not of class. It would be difficult to bankrupt a building society conducted by men endowed with honesty and good common sense. The “better citizen” is the man who spends less than he earns, pays his debts promptly, would rather give his neighbor a dollar than steal a dollar from him, looks upon the home institution as holy and sacred, strives to own a home of his own, obeys the laws and looks the world straight in the face. This “class,” without a penny to begin with, caused Philadelphia to be known the world over as “the City of Homes.”
In the many interesting cases of men redeemed from the habit of unthrift through the agency of building associations, and placed on the road to moderate fortunes, there are sometimes two sides to the story. One side is that related by the individual who has been saved from future poverty, and the other side that which could be related by the wife and mother, if she did not prefer and really strive to hide from the outside world the life she had been leading, its trials and gloom. The man simply tells how many days in the week he preferred not to work, and how he never tried to save a penny. The wife could tell how little the husband brought into the home in the way of money, and what her awful anxiety had been. One side is public property, for it is told by the husband for the purpose of inducing others to make a new departure on the road to thrift and home-ownership. The other side is supposed to be sacred, but it is only a secret in a sense that it is not proclaimed. No man who is often voluntarily away from his work, having a “good” selfish “time,” spending the earnings of days of actual work, need imagine that his friends and neighbors are ignorant of what the life in his home is, for it is as plain to all as if the house was constructed of clear glass.
Every man of good health, who will make an honest and determined effort, has it in his power to change such a home as has been described into a palace of joy, comfort, and happiness, and even beauty.
There are many thousands of men and women throughout the land who would not to-day have their own roof over their heads but for the building society and the thrifty habits acquired through it.
ROW OF $1400 HOUSES.
The officers and members of these societies are men who have, by degrees, worked their way on the path to independence, and they are highly respected by all who know them, and pointed out as examples by their neighbors.
Members of these societies, after becoming firmly established in thrifty habits, delight in relating their own experience as well as that of others. There are thousands of interesting cases on record, of which samples are given below:—
A short time ago, at a house of mourning, the members of the family called the writer’s attention to a girl about fifteen years of age, who had volunteered her services to the family until after the funeral. This remark was made: “Our case is sad enough (the death of a father), but the child you saw at the door has a father who has been confined to the house with a lingering illness. There are several younger children, and one girl older than the one you saw. The two girls have been working in a mill, but on short time. Their case is sadder than ours, and they were the first to volunteer to help us.” The above is the sad part of the story, but there is a silver-lined side, since ascertained. The father joined a building society some years ago and bought a house for $2000, and while on his sick bed received a paid-up deed for his home, the building society shares having matured.
It is now twenty years since a big, strong man, under the influence of strong drink, visited the office of a building society secretary and asked if a Mrs. —— had any shares in the society. The books were examined and an affirmative answer was given. The next question was, “How much has been paid in on the shares?” Answer, “Three hundred and sixty dollars.” The inquirer brought his fist down on the secretary’s desk and exclaimed:—
“So it is true, is it? I will stop that game; that woman is my wife, and I have just heard that she is going to draw out the money and run away.”
The secretary measured the man, and, risking a fight, determined to hasten a climax.
“So you are the husband of Mrs. ——, are you?”
“Yes, I am.”
“And you are drunk?”
“Yes, sir.”
“How long have you been drinking?”
“Have you given your wife any money lately?”
“No, sir.”
“Have you given her any of the money in this society?”
“I don’t think I have.”
“Your wife takes in washing and goes out house-cleaning, does she not?”
“Yes, sir.”
“You eat at home without paying anything towards the support of the house?”
“Yes, sir.”
“You have nice children, and your wife takes good care of them?”
“Yes, sir.”
“You admit that all this is true?”
“Yes, sir.”
“Now, will you answer me an honest question?”
“I will.”
“Don’t you think that you are just the kind of a man that a good woman like your wife would be justified in running away from?”
“I do.”
The secretary asked who told him that his wife was going to run away; and he answered that it was a friend.
PLAN OF $1400 HOUSES.
The secretary then addressed him as follows:—
“When your wife comes to the society, I have noticed that her hands were sometimes split and bleeding from hard work, and I know that she is saving this money to keep you and the children from the almshouse. In the first place, you should give up drinking and keep away from the people who have been talking against your wife; and then I would advise you to go home at once and tell all to your wife, and get down on your knees before her and ask her pardon.”
To the utter surprise of the secretary the man shook hands with him and emphatically gave his word that he would act on the advice given.
Not the strangest part of the incident is that the advice was exactly followed. From that time until now the man has abstained from drink. As soon as he got work he took shares in the society, and in a few years three of his children had subscribed for shares. Only recently two of the children withdrew shares to buy homes of their own. This is the kind of practical work done by every building society in every State in the Union, and the State as well as the entire country is the gainer by it.
Of course it goes without saying that the building society knows no secret plan for the payment of dues and interest greater than the borrower can afford. It does, however, point out a way for every man to gain a home of his own, but the price of the house must be in keeping with his income. If this rule is not observed the result is almost always failure to gain the desired object. It is an old saying that it is almost wise to go in debt for a home, but it is decidedly unwise to contract for a home that requires every dollar of income to keep it up.
Every home buyer should allow himself some margin in order to provide for the possible rainy day. The man who cannot save over twenty dollars a month outside of actual living expenses commits a serious error when he signs a contract requiring him to pay twenty-five dollars every four weeks. In doing this he robs himself first, and, second, is unfair to his family. It would be to his advantage to place aside three or four dollars out of the twenty dollars named as a nest egg.
This applies in particular to the careful man, who has been taught in the school of thrift. The man who has been unthrifty may be able (when he graduates) to save thirty dollars a month even when he thinks he cannot save anything. Building society managers make it their business to warn the thrifty not to undertake too much, and also to lead the unsaving into habits of economy.
Only recently a judge on the bench said, “Such associations, when properly conducted under judicious restrictions and management, are a helpful blessing and encouragement to any community. But the ambitions and extravagance of some borrowing members place themselves in a burdensome condition.... Far better for the public, the associations, and their membership, that many small loans be made rather than a few in number and large in amount. Moderate homes and a moderate price should be the criterion.... Their primary purpose was and should continue to be to promote industry, frugality, and saving, and convert the shiftless and discouraged tenant into a self-reliant and contented home-builder.”
Building societies since their inception have supplied the means for home purchasing, but these companies do not generally take any part in the erection of houses. Most of the small homes in Philadelphia have been built by those engaged in the business of building houses for sale.
Here is a picture of a row of houses containing seven rooms each. The purchase price is $1400 each. The lots are 14 feet wide and 60 feet deep. The houses are brownstone and brick. They have good cellars, portable heaters, and range in kitchen, hot and cold water in kitchen and bathroom. On the first floor there are three rooms,—parlor, dining-room, and kitchen, and outside shed. Front door opens into vestibule; entrance to parlor from entry, and also from dining-room. Two front bedrooms over the parlor, bathroom in centre, and sitting-room back of the bathroom. The dining-room extends over the width of the lot less stairway room, and receives light from skylight. The kitchen has a window opening towards the back shed or backyard. A small toilet room occupies a small portion of the back shed.
BUILDING ASSOCIATION BANQUET.
Any person known to be prompt in the payment of dues and interest may purchase such a home by the payment of $200 in cash, and giving a building society mortgage for the balance of the purchase-money, namely, $1200.
The monthly cost would be about as follows:—
| Monthly dues | $6.00 |
| Monthly interest | 6.00 |
| Monthly total | $12.00 |
A fairly prosperous building society will mature its shares in twelve years, and at the end of that period the home would be free from debt. During this time the borrower must pay taxes and water rent, amounting to some $25.00 per year. The total payments would be about as follows:—
| First payment | $200.00 |
| Dues and interest | 1728.00 |
| Taxes and water rent | 300.00 |
| Total | $2228.00 |
This seems like a considerable sum of money for a house worth $1400. But it must be remembered that the borrower has lived in the house during these twelve years, and that he has saved in rent that he would have paid elsewhere, at least $1800.
| He has paid | $2228.00 |
| He has saved | 1800.00 |
| Real cost of house | $428.00 |
Now he is the full owner of his own home. During the next twelve years he will have nothing to pay but taxes and water rent, and possibly some slight repairs, at the most not over $400 all told.
His next door neighbor is still a renter, and pays $1800 to his landlord during the second period named; and the two accounts compared show:—
| Rent payer | $1800.00 |
| House owner | 400.00 |
| Saving | $1400.00 |
This is equal to a saving of, say, $10.00 a month for 144 months, and if used in the purchase of ten shares of building society stock would be worth at the time named $2000, instead of $1400 merely saved. The neighbor who is a tenant is still paying rent and owns neither a stick nor a stone, while the building society borrower owns one house free and also has the command of $2000 in cash, all on account of his house-owning experiment.