"The American Home, the Safeguard of American Liberties" The American Building Association News A Newspaper devoted to the interests of Building, Loan OFFICIAL ORGAN UNITED STATES LEAQUE. 16 WEST SIXTH ST., CINCINNATI. S. W. COR. ADAMS AND DESPLAINES, CHICAGO. WEST COAST DEPARTMENT: 401 VAN NUYS BUILDING, LOS ANGELES, CAL. SUBSCRIPTION, $3.00 PER ANNUM. CANADIAN AND FOREIGN, $4.00 30 CENTS A COPY. Entered as Second Class Matter at the Post Office at Cincinnati, O., SINCE 1880 THE RECOGNIZED AUTHORITY ON BUILDING ASSOCIATION MATTERS. Vol. XLII. NOVEMBER, 1922 No. 11 ONE "The 5% Loan" Dream. NE of the leading "3%" Loan Companies, of Los Angeles, Cal., that stopped doing business recently, by order of the Corporation Commissioner, has been reorganized under another name, and is now trying to make the world believe that you may borrow money at 5%. The plan of this company embraces the following, as explained by their Sales Department Bulletin and their contract. Based on a loan of $1,000.00, a contract fee of $25.00 is charged, $15.00 is held out of the next two payments of $10.00 per month for the expense fund, making a total initial expense of $40.00. $10.00 per month is paid on the contract which earns interest at the rate of four per cent per annum. A further deduction of $10.00 is made for expense fund reserve, which can only be drawn on by the company, however, at the rate of ten cents per month per thousand. The contracts are issued serially and the loans made in the order in which the contracts mature, or sufficient money has accumulated in the loan fund to make the loans called for by such contracts, in numerical order. They expect that no contract holder will have to wait more than fifty months for his loan. They claim that if the loan is made at the end of fifty months "the actual interest rate, therefore, is 9.52 per cent. Actuarially this method is exactly correct, but it is not one familiar to any business man. Following is a quotation from their Bulletin, addressed to their agents: "Do not try to sell your contract with promises of early maturity. Study this contract and you will understand that the longer a man waits for a loan the better will be his financial condition to build a home or use the money otherwise.” Another Bulletin gives instructions to field managers and agents and states that the commission as field manager is $15.00 for each thousand dollar contract secured. The contract (under tables of values printed thereon) shows that the actual interest rate paid by the borrower, if the loan is made two years from the date of the contract is 7.05 per cent, at the end of three years, 7.80 per cent, at the end of fifty months (and they do not seem to expect to make loans beyond fifty months after date of contract) 9.52 per cent per annum. If the contract holder had to wait six years, the actual rate would be 18.14 per cent and at the end of seven years the actual interest rate will be 42.52 per cent per annum. By that time, furthermore, he would have paid in $840.00 of his own money. As an investment we find the following: He would pay them. $40.00 expense money on a $1,000.00 contract; they promise to pay him 4 per cent interest (which can be secured from the savings bank, or 6 per cent from a building and loan association, without any initial expense at all). After having paid in one year on a $1,000.00 contract or say $120.00 paid in, the surrender value would be $115.83. At the end of two years, having paid $240.00, his surrender value would be $241.47. He would have enjoyed the privilege of making $1.47 interest on his monthly payments of $10.00 each for a period of twenty-four months. At the end of four years he would have paid in $480.00 and would get back $508.63, which represents interest of $28.63 on an investment of $480.00, for an average time of about two years, or about 3 per cent per annum net. A monthly investment of $10.00 for the same length of time in a savings bank at 4% would give him $519.28, or in a building and loan association at 6%, $540.15. Crime is said to be the product of neglect and the tenement house a Babel. Let it become an Ark of safety, sanity, healthfulness and comfort and the modern masses may be saved, as were those in the Ark of old, from epidemics that otherwise will sweep them away as by a flood.-Clark. THE Illinois League Meeting. HE meeting of the Illinois League, held at Peoria, goes down in history as one of the best ever held. Some excellent addresses were delivered and questions vital to the movement were given consideration so that there is reason to believe that the groundwork at least has been laid for progressive activity in the future. Mr. Prugh, of Columbus, O., and E. E. Katterhenry, of Indianapolis, Ind., invited guests, delivered splendid addresses, which were received with great enthusiasm. The many papers and discussions evidence a development that is remarkable. The foreign element associations were strongly represented and took a great interest in the proceedings. The election of President James A. Calek, of Chicago, was enthusiastically received. The address of President McCulloch and Maurice E. Vasen were carefully prepared and deserve commendation. The banquet tendered by the association of Peoria, at Block & Kuhl, the leading department store, on Thursday evening, was a memorable function. About 500 delegates and guests attended. Mr. John D. Mailing, New Haven, Ind., spoke on "Origin and Effect of Freak and Class Legislation." Splendid music and entertainment was provided for. A "Young" Ward B. Whitlock. N Illinois League meeting without the presence of Ward B. Whitlock, of the Auditor's office, would be a strange affair. He has come to be an integral cog in the moving of the machinery. Whenever the meeting runs up against a snag, Ward comes to the front with a solution. Being on the inside he is perhaps better posted on building association affairs in Illinois than anybody else and he generously gives the delegates the benefit of his knowledge and judgment. At the last session they proposed to call him the "Grand Old Man of the Building and Loan Movement," but he balked at being looked upon as "old." He was right. A man with his pep and vigor should not be handicapped with a has-been title like that. Some people can watch the years go by without coming in contact with them. Ward Whitlock is one of them. He remains the same. Mr. Whitlock's father was an interested visitor at the convention and felt proud of his son Ward B. The Illinois building associations are fortunate in having a true friend like Ward Whitlock in the Auditor's Office. T The Name Contest. HE name contest, which was started several months ago by President J. E. Kinney, of the United States League, has set many an old building association head to thinking. The problem, to find or coin a word that fittingly describes the buildingloan worker and the building-loan business is not the easiest one that could be proposed. As a friend from another state described it: "Kinney is a Buckeye and he has given us a nut to crack.” He offers one hundred dollars to the one submitting an acceptable name. The contest is still open. As the terms of the original offer did not fix a closing date, Mr. Kinney has set March 1, 1923, as the final date for the submission of names. That will give the committee ample time to make the award and submit their choice, if any, to the United States League at its meeting at Tacoma, Wash. Quite a number of entries have been received, but more are wanted. No limit to the number of entries, which should be sent to the editor of the American Building Association News who will forward them to the committee in charge. A Death Summons James R. Moorehead. TRUE friend and earnest promoter of the building and loan movement was removed from a wide field of activity when James R. Moorehead, secretary-manager of the Southwestern Lumbermen's Association, answered the call of death, Tuesday, October 24th, at Kansas City, Mo. While not directly connected with the management of building associations in recent years, Mr. Moorehead was thoroughly familiar with their operation and their power for good from earlier connections with them. He knew that they were striving to accomplish great and wholesome things and he was keensighted enough to see that they were not covering the field as they could and should do. He believed in home-building and home-owning entirely aside from the fact that he was linked up with the building industry. He therefore cast about for ways and means to enlarge the scope of the building and loan associations, by creating an agency to plant new associations in localities where they were not as yet established and to strengthen and invigorate those already doing business. It was no easy task, but he was persistent and tireless. He worked in an everbroadening circle: first in his home town and immediate vicinity, then in the southwestern states through the Southwestern Lumberman's Association, and finally at the last American Lumber Congress he made such a presentation of his plan that it was given a national scope. In furtherance of this plan he enlisted the service of Hon. Frank A. Chase, who for the past several years has been going up and down the western states preaching the building-loan gospel, and starting new associations on their feet. Surprising results were achieved along these lines. In pursuance of this work it was found that one of the principal drawbacks in getting new associations started consisted in the lack of trained managers and secretaries and as a result plans for the establishment of a building and loan school in Kansas City were completed and partly put in operation, when Mr. Moorehead was suddenly removed from the scene. But he has shown how to do the work and no doubt it will go on in the constructive spirit that he conceived it. Mr. Moorehead had not been in robust health for several years, but of late seemed to be almost back to normal when a light attack of pneumonia complicated with heart trouble brought about his death within a week. The building associations, along with other interests, mourn in the death of Mr. Moorehead a friend, counsellor and leader. Lumbermen Boosting Building Associations. During a symposium on "Financing Dwelling Construction," at the National Retail Lumber Dealers' Association convention, at Cleveland, O., October 25th-27th, Mr. W. S. Dickason, who conducted the discussion, said: "The building and loan association is the best method ever devised for providing money for the financing of homes." He asked all lumbermen present who were officers, directors or stockholders in a building and loan association to rise. Almost onehalf of the audience arose, which Mr. Dickason characterized as a splendid showing, but urged all lumbermen to get behind the movement and do all in their power to promote the establishment of strong associations in their communities. A general discussion followed, participated in by a large number of retailers, the consensus being that the building and loan associations is the retail lumberman's best friend and ally, and should be fostered to the limit. |