« ΠροηγούμενηΣυνέχεια »
premium a certain amount on his shares, is in the nature of a sale of his shares, and not usurious.”*
This opinion marks an era in the history of building associations in Illinois, not only because they then were surely established on a legal basis, but also because this case called into existence the Illinois Building Association League, which has done much to further the interest of associations in this State, and promises to do more in the future. As has been said, but fourteen associations met to form the League, and but twelve were engaged actively in getting the rehearing of the case, which resulted in the firm establishment of the associations. So, too, though the League has continued its existence for "the protection and defence of building association interests," according to its constitution, the number of members has always been small never exceeding twenty associations—until the last meeting, in June, 1888, when the membership was increased to thirty-two associations. The League has been at different times active to secure legislation that would put the associations on a firmer basis; and, at the last session of the legislature, by the exertions of the officers, two amendments to the law were passed. The first authorizes the monthly payment of premiums instead of the deduction of the whole amount from the loan. Some associations had already adopted this plan, but without authority of law. The other amendment exempts association stock and mortgages from taxation. Besides the State League, a Cook County Building Association League has been organized for the purpose of advancing the interests of the associations in Chicago and vicinity. The purpose of this league is not merely to recommend such legislation as may seem advisable and to consult once a year regarding methods of management, but it is proposed to hold monthly meetings, in which important questions of management shall be discussed. Such subjects as
Methods of computing Profits," "Trust Deeds and Mortgages," "Officers' Bonds," "Insurance on Vacant Buildings," "State Inspection," etc., are to be discussed in the near future, and recommendations made to associations in accordance with the decisions reached.
It is understood that nearly all the members of the Cook County League and many at least of the State League favor State inspection of the associations. There can be no question that not a few associations are managed by men not trained in business methods,
* William M. Holmes and Monticello Building Association vs. Smythe.
who are really incompetent to manage such a business. That some control should be exercised over such associations in the interests of the diligent, frugal working-people whose savings are thus invested seems clear.
It is much to be desired, also, that in addition to State inspection the law be still further so amended as to require yearly reports from all associations to a State official, who can then publish the statistics regarding the associations of the State. It is uncertain whether the League will receive enough support from the active associations to enable it to collect and publish reliable statistics and other information that will be valuable to associations throughout the State.
In the preparation of this report, the president of the State League furnished me some valuable notes regarding the history of the League; and many valuable suggestions have been made by the secretaries of the different associations. But it has been necessary, in the absence of reliable statistics, to depend mostly upon voluntary answers to circular letters accompanied by blanks for filling out.
Of the 258 associations in Chicago listed in the American Building Association News there are, doubtless, considerably more than 200 in active operation. Of these, it was possible to get the addresses of only 161. To the 161, then, blanks were sent. Of these, 25 sent replies in time for listing, which will be found tabulated in Schedule I. Blanks were sent to 289 associations outside of Chicago,- all that could be found. From these were received 53 replies, tabulated in Schedule II. So, from the 450 circulars, only 78 replies were received in time for listing. From these, no very accurate conclusions can be reached regarding the aggregate amount of the business done; but some idea of the average may be gained, and the figures, as well as the distinctive features of some of the associations, will be found suggestive.
In the first place, it is worthy of note that more than one-third of the stockholders are women, and that the average loans made are such as to show that it is principally the smaller wage-earners who are receiving the benefits of the associations. While, in the larger cities, an occasional loan of $10,000 and upward is made, loans even so large as this are rare. The high premium bid, in most of the associations, while it tends, of course, to make large profits for the non-borrowers, shows, nevertheless, that the demand for money is strong, and that the associations are really accom
plishing their mission of helping those who wish to build homes. It is further to be noted that some of the later associations are taking measures to prevent the purchase of shares by non-borrowers, so that the objection in such cases to the high premium loses force to a great extent.
It is evident that the question regarding the rate of expenses to management was misunderstood by many of the secretaries, so that no comparison -e.g., with savings banks can be made in this respect. Also, the word "limited," applied to the plan of organization, has been understood by some to refer to amount of capital stock; by others, to duration of charter, etc. It is probable that very few, if any, associations are organized on the "limited" plan, contemplated in the law of 1869, by which stock was not issued in successive series. The oldest association in the State is the People's of Chicago, which was organized in 1874. Since the days of the "limited" associations, much improvement has been made in the methods of management, and new features are found in many of the later ones. Nearly all changes are, as they should be, in the interest of the borrower. Instead of deducting the whole premium from the face of the loan, as was common, it is now usually paid by instalments. So, too, in comparatively few associations is the first year's interest deducted from the face of the loan.
Some of the larger and later associations, again, see, for example, the Phoenix of Chicago,- do not permit stock not borrowed on to mature, but after four years call it in and cancel it, paying a fair rate of interest and applying the surplus profits to reduce the interest on loans. Similarly, the Home Building Association of Rockford applies surplus funds in calling in stock not borrowed on in order of its issue, without waiting for it to mature, though in this case no four years' limit is fixed.
As has been said, from the returns made no reliable estimate can be made as to the amount of business done in the State, or even in the city of Chicago. It is probable that, on the whole, it is the larger and more prosperous associations that have made returns, so that, if we were simply to increase the total amount of loans in proportion to the number of associations, we should be shooting far beyond the mark. This much, however, is certain. In the city of Chicago alone, the amount of loans runs far up into the millions; and many thousands of houses have been built through the aid of the associations. Still further, it is beyond
question that the number of associations is increasing very rapidly, and never so fast as at present. The size of the new associations, also, is much greater than the older ones in proportion to their age. At the present rate of increase, a few years will see Chicago a city of home-owners to as great an extent as any city in the country. Already it stands high in this regard. What is true of Chicago holds true to nearly or quite as great a degree of the State as a whole. The tendency is one that is very encouraging. It is certain that, when workers own homes, steadiness, morality, and thrift are encouraged, and lawlessness is held in check. Very cheering is it to note that not merely do some of the larger associations find it necessary to print reports in German and other languages as well as in English, but that there are several associations in Chicago managed and patronized solely by the Bohemians, Poles, and foreigners of other nationalities. When they fix their homes with us, their interests will soon lead them to learn our language and to respect our laws.