plan," with the rebate system; and a minimum premium bid of $40 upon a share. It assumed eight years as the time in which its stock would mature. In case of competition among the borrowers, the highest bidder for the loan, above $40 per share, obtained the loan. In case the borrower repaid the loan before the shares matured, he was allowed a rebate upon the amount of premium he had paid, of one-eighth for each whole year unexpired of the eight years from the time the stock was issued upon which the loan was made. It loaned only to its shareholders, and to no shareholder a greater sum than the matured value of the shares held by him. The issue of stock in the first series was limited to 1,000 shares, and thereafter to 500 shares, in each series.

This association was popular, and its stock was eagerly sought for: it could have issued a much larger number of shares except for the limitation in the articles of association. At the end, however, of four or five years, its prosperity began to flag. Borrowers began to appreciate that they were paying an enormous interest, of which free shareholders obtained the benefit. Moneys accumulated in its treasury. To relieve the stagnation, the minimum premium was reduced to $20 a share. But this did not help the difficulty; and finally, seven years ago, the articles of association were amended, wholly abolishing a minimum premium. From that time to this, when there is no competition, the borrower receives his full $200 a share upon his loan, and pays 6 per cent. interest thereon in monthly instalments.

From that time the association began to grow in popularity. It found no difficulty in finding borrowers for its money. The numbers of its stockholders rapidly increased. Some three years ago it increased the maximum limit of shares which it might have outstanding at any one time to 5,000. Already it could have passed beyond that amount except for the limitation. Its management discourages the bidding of high premiums; and under its scheme every borrower understands that the premium bid by him is, in fact, a bonus. Its annual report for March, 1887, showed loans made during the year to the amount of $40,750, while the premiums received amounted only to $62. In 1888, it loaned about $60,ooo; and the premiums received amounted to $232. Since it has conducted business upon this scheme, every shareholder remains its warm and enthusiastic friend, whether he be a borrowing shareholder or a free shareholder. Its first series of stock matured three years ago; and since that time it not only issues, but ma

tures a series of stock each year. At least 95 per cent. of its shareholders are wage-earners. It has at present over 500 different shareholders, and assets of about $200,000.

The act of 1887 was drafted by a gentleman who has been president of that association from its organization; and the scheme upon which it is now conducted is crystallized into that act with certain changes, which he deemed improvements, thereon. Instead of "Building and Loan Association," the name given to these associations by that act was "Co-operative Savings and Loan Associations," that name more accurately describing the true nature of the institution in the present condition of our social development. The passage of this act attracted attention to this class of associations throughout the State.

For a few months previous to the enactment of this law interest in these associations began to be aroused in the city of New York and vicinity. About two years ago the publication of a monthly paper was commenced in the city of New York,— The Building and Loan News. It served as a channel for the exchange of views between those interested in this class of institutions; and its publisher and his friends have done much during the last two years to arouse interest in building associations. About the same time the New York World became their friend; and an association was formed within the limits of its own employees, which thus far has met the expectations of its most sanguine friends. York Star is a most valuable champion of these associations. Mr. Charles F. Southard,* connected with that paper, has become a conspicuous leader and writer in the city of New York in advancing their interests; and he is doing faithful work in their behalf.

During the last year there has been what may be called a regular "boom" in the organization of these associations in the cities of New York, Brooklyn, and vicinity; and it is now spreading throughout the entire State. In May last, a meeting of representatives from the different associations of this class throughout the State was called at Rochester, for the purpose of organizing a State League. About seventy associations were represented in the meeting, and a League was perfected. The object of this League is to combine the influence of the associations throughout the State; to prevent hostile legislation; and to weed out associations that have been formed under the act of 1851, in pretence

Mr. Southard is no longer (November, 1888) connected with the Star, but is lecturing on the best plan of such associations.

claiming to be co-operative building associations, but which are in fact organizations for the purpose of making money for those who are immediately concerned in their management. We are also advised that the superintendent of the banking department has become interested in their behalf, and that at the coming session. legislation will undoubtedly be passed which shall effectively place them under State supervision and control.

In conclusion, it can be said that these associations are now meeting with great success in the State of New York. Public attention is so strongly drawn to them that without doubt there will rapidly come a unification of the schemes upon which they are conducted; and we believe they have before them a prosperous future. We believe there is no financial co-operation of any kind which can be so utilized as an economic power in our social organization to advance the condition of the wage-working classes as these co-operative savings and building loan associations. To secure this result there should come to pass through the legislature a scheme, uniform in its essential features throughout the State, upon which their business shall be conducted; and State supervision similar to that exercised over savings banks. In the scheme adopted, three fundamental principles must be adhered to: 1. Simplicity of the scheme. It must be so simple that the ordinary wage-worker can understand it.

2. Equity between the borrower and the non-borrower; the borrower obtaining his loan at legal rates of interest, and the nonborrower receiving a higher rate than the savings bank can pay.

3. Security against loss of the funds. The danger against loss is reduced to the minimum when the funds are loaned only upon a bond with first mortgage security upon unencumbered real estate, or secured by stock of the association which exceeds in value the sum loaned.

It is not difficult to follow these principles. They have been followed in the scheme outlined in the act of 1887 in this State. They have been closely followed in the Massachusetts scheme of "co-operative banks."

It is proper to say that Judge Dexter, who has been investigating the question of co-operative banking for several years, and is the author of the New York law of 1887, has ready for the press a work on the whole subject, which seems likely to supersede all former books in the United States. It will be published in 1889,

and will give much fuller information than this number of the Journal contains concerning Building Associations and their mode of management in different parts of the country. Writing to the Secretary of the Social Science Association, Nov. 26, 1888, Judge Dexter says:

The work so grows upon me that I feel compelled to rewrite chapters that I thought months ago were completed. I have collected much data since the Saratoga meeting regarding these associations in the different States. This morning I have received a complete list of all the associations in Wisconsin, through the kindness of the Secretary of State, and also answers to a series of questions sent out by me concerning the scheme by which the business is conducted in that State. I feel and know that my work is very incomplete at present; but, in my judgment, I ought not to delay it much longer. A new work on these Associations has just been issued by S. Rosenthal & Co., at Cincinnati, entitled "Manual for Building and Loan Associations."

6. THE DANGEROUS SIDE OF BUILDING ASSOCIA

TIONS.

BY C. F. SOUTHARD, OF NEW YORK.

(Read Sept. 7, 1888.)

Mutual building loan associations or co-operative banks, which at different periods during the past half-century have been brought more or less prominently to the attention of people living in large cities, are at the present time a subject of general interest. The leading feature of this form of co-operation always has been, and is now, that no sooner is the subject agitated than it attracts the attention of rich and poor alike, and the practical work of organization follows immediately. For the second time in the history of the Empire State, the dwellers in all the large towns and cities, particularly New York and Brooklyn, have caught the building and loan association fever; and the springing into existence of these associations is a matter of daily occurrence. During the past eight months, fully 15,000 people have enrolled themselves members of these associations in New York and Brooklyn; and the writer has in the same period responded to nearly 15,000 inquiries on the subject, received by letter from almost every section of the country, particularly the South, and by personal interview attempted to explain the associations to more than 70,000 people.

The general spread of the organizations is both a matter of congratulation and fear,- congratulation, because, whenever and whereever organized, they have drawn wage-earners and rent-payers into warm and unselfish communication, and prove that men, women, and children, earning 50 cents and upward a day, can create capital for themselves along the line in which all capital is created,- by saving a portion of their weekly or monthly income, and loaning it at interest, thereby establishing habits of thrift and a sure foundation for their future financial and moral well-being; fear, because of the universal ignorance among officers and members of the simplest rules governing finance, and the general desire and encouragement to recklessly speculate.

In 1849-50, these associations sprang into existence in different