To the Editor of the Hawke's Bay Herald.

Hawke's Bay Herald, Volume 4, Issue 190, 11 May 1861, Page 5

To the Editor of the Haw ke's Bay Herald.

Sib, I shall feel obliged to any of your readers who will inform me upon what calculations the plans of the Napier Building Society are based ? From a little calculation I have made, it seems that the charge made for the shares taken up will be a long way from making a fund sufliciont to pay those who do not draw a share, £100 at the end of 10 years. I suppose a Society consisting of 35 members, (for simplicity in calculating I say 15 as what is true of 15 would be true of any number) on the same plan as the Building Society. These 15 members pay 10s. per month, which, at the end of first year, amounts to £90. One of their number takes this as his share, (£9O is about the average "price the Building Society's shares fetch) and pays Bs. per month for nine years, besides his subscription. At the end of the 2nd year another £90 has accumulated which another member takxjss, paying Bs. per month for 8 years, besides his subscription, and so on. These payments of Ss. per month, at compound Interest at 10 per cent, amount as follows : — Ss. per month for 9"years £65 8 " 55 7 " 45 6 " 37 5 " 29 " 4 " 22 3 " 16 2 " 10 1 " 5 284 Add to this the 10th year's subscriptions 90 374 Which is all that the six members who have drawn n° shares will have to divide amongst them. This suppose s no charges and no loss of Interest by delays. The position of the Napier Society at its best is the same as this. And if, as seems likely, shares will have to be disposed of at about £90, so much the worse. I would therefore advise members to look through the calculation for themselves. Tour obedient servant, Lebea, Napier, 2nd May 1861. P.S. — As a fundamental rule in these societies the borrower should pay the same interest as the lender expects to receive.