BUILDING SOCIETIES.

Wellington Independent, Volume VI, Issue 560, 22 February 1851, Page 4

BUILDING SOCIETIES.

(From the Family Economist.) Tho societies, with whoso title wo preface our remarks, originated in one of the social movements so eminently characteristic of tho present period.—that of cooperation—the desire, with which all men aro moro or less imbued of bettering thoir condition. The indequacy of individual means to accomplish any object requiring an outlay of capital would'naturally suggest to somo minds tho advantages to accruo from the uniting of a number of small sums : railways serve as an example of what may be dono by association for a dofinite object. The house in which a tradesman or workingman lives is, generally spoaking, ono of the principal objects of his care and attention, —the tradesman wishes to have a house suitably situated for business, the working-mail likes to have a healthful and comfortable homo. Now it is clear that in most instances a tenant paying rout steadily during a period of fifteen or twenty years, will in that timo havo more than paid the full value of tho house he occupies, for the mere privilege of residing in it. This is so universally the case as to be considered a matter of course, which cannot be altered; but in the case of tho working classes more particularly, the fact of living in a houso for twonty years leavos them no substantial benefit at tho end of that period. It occurred to somo persons that by a little co-operation they might retain in their own hands, somo of tho benefits which had, hitherto, been tho exclusive property of the landlord. A scheme was drawn up, in which it was shown, that the yearly rent might

grow into a fund forthe actual purchase of the house in a certain number of years. The project met with supporters; an act of parliament was obtained, the preamble of which declared :—" That certain Societies, commonly called Building Societies, have been established in different parts of'the kingdom, principally amongst the industrious classes, for the purpose of raising, by small periodical subscriptions, a fund to assist the members thereof in obtaining a small freehold or leasehold property, and it is expedient to afford encouragement and protection to such societies, and the property obtained therewith. The Act here referred to was passed in the reign of William IV., since which period Building Societies hare greatly multiplied in every part of the country; not a town of any importance, either as regards locality or manufactures, that does not contain one or more ; some have accomplished their object, others are flourishing, others, again, have proved to be frauds upon tho shareholders. There are, it is said, more than one thousand societies iv London and the provinces, contributing in monthly subscriptions, no less a sum than £'2,100,000 annually,—an amount of capital, which if judiciously laid out, must manifestly benefit the subscribers. From various pros])ectuscs now before us, we quote the professed objects of a Building Society;— I. To raise a fund by small monthly subscriptions, to afford to the people, increased facilities for the erection of houses, or for the purchase of freehold or leasehold property. If. To enable tiie occupiers of houses to become tho proprietors, by periodical payments of purchase money, in lieu of rent, their subscriptions being advanced upon mortgage of freehold and leasehold securities only. 111. To enable depositors, or shareholders and investors, to obtain a secure and profitable investment for capital.The society is managed by the usual staff, —President, Vice-President, Directors, Secretary, &c, &c , and staits with the intention of issuing a fixed number of shares, say 1000 at £50 each, or 500 at £100 each. " To illustrate," says the prospoctus quoted above, " the working of the principles adopted by this j ociety, let it be assumed that a member purchases a property for investment at the sum of £300: to raise this amount, he receives an advance of six shares, and ho pays to the society his monthly subscription as follows:— Six shares at 1 Is. Gd. £3 9 0 Multiplied by months 12 Gives yearly payment 41 8 0 And by years 10 £414 0 0 shews the total payment which he would make to tho society for the advance in question. " Tho benefit resulting to a member by the purchase of his residence may thus be fairly stated. He occupies "a house held for a lease, having sixty years unexpired, for which he pays to his landlord a yearly rental of £35., and whicli he can purchase at £300. By the payment, therefore, to tliis society of £6. Bs. annually above the amount of his rent, his residence at the the termination of the society, (in ten years) would become his own property at the moderate cost of £64." This may be taken as an average specimen of the working of such societies; there are, however, different methods of imparting the benefits. We quote from another prospectus, in which the Directors stato their object to be, not to hold out inducements to capitalists, but the mutual advantage of all the shareholders. Subscriptions aro required for the purchase of property, and to keep the machinery in motion, but at the termination of tho society in thirteen years, a large amount is to be returned to the subscribers. Thus they continue:—"A member wishes to purchase a six-roomed house; it lets for £24., subject to a ground rent of £4. The price is £200.; he holds two shares in this society, which secure an advanco of £200., without interest or discount; he purchases the house, paying back to the society in monthly and quarterly instalments :— Subscription on 2 shares at £ s. d. Is. Od. per share, per weok, per annum 7 10 0 10 per cent, on the £200. advanced 20 0 0 £27 10 0 These sums paid for ten years make 278 0 0 Subscription for the Ilth, 12th, and 13th years 23 8 0 Add entrance fee for two shares 0 4 0 £301 12 0 During the ten years he X' s. d. has saved or received in net rent £20 per ami. 200 0 0 Subscriptions returned at the close of the society Mil per Bliare 98 0 0 ■ 298 0 0 £3 12 0 , He will thus havo become possessed of property worth £200., at a cost of £3. 12s. which sum has been expended in tho management of tho society." It must, however, be borne in mind,

that these societies employ a solicitor, and thut certain expenses arc incurred as Law Charges, the amount of which ought always to be specified in the prospectus, instead of receiving only an incidental mention. It is hardly fair to intending purchasers to keep them in ignorance upon this point, and law charges, as is well known, have an unfortunate tendency towards the excessive. Individuals who might wish to avail themselves of the promised advantages of Building Societies, would do well to exorcise caution in the disposal of their savings. The loss of the payments of one or two years might be total ruin to a working-man; we have just heard of a society in London which has ceased to exist in consequence of fradulent management, leaving a sum of £1500 totally unaccounted for; and this is but one out of many similar cases. In the smaller towns and in rural districts there would naturally be less risk; there people are acquainted with one another, the whole of the managers would in most cases be known to the subscribers, and the industrious classes might then invest their hard-earned savings with an assurance of a profitable return. In many places, the most beneficial results have followed the establishment of those societies. Working-men having once joined them have exerted themselves to the utmost to keep up their payments, foreseeing the important benefits to follow a few years of steady perseverance. It is not necessary that the purchase should be in every case a house : garden ground, building jots, or a small farm may bo bought at the pleasure of the subscriber; all that the society require being that the property shall bo such as will prove a sufficient guarantee for the advances made. Every week's payment in such a case brings a man nearer to his object, and, if favoured with health he will be the owner of property,—an anticipation that would cheer many a desponding hour. We have heard of an individual who lately purchased a house in the outskirts of London for £500 ; it was an eight-roomed house, at a lease of eighty-one years, and £8 per annum ground rent. Such a building will let at a rental of £45 or £50 ; the buyer consequently makes a most valuable return upon his outlay. A £200 house iv London lets at from £16 to £24 yearly, and many members of Building Societies finding respectable tenants in occupation of the property they had purchased, have chosen to receive the rents, and defer taking' possession until a future day. _ As far as we can learn, the most desirable Building Societies appear to be those termed Bowkett Societies, from their author, Mr. Bowkett, of Poplar. This gentleman thus familiarly explains the advantages of co-operation : suppose there are twenty men, each of whom can lay by a shilling a week only, out of his earnings; some of these men are greatly in want of a sovereign, but, individually, twenty weeks must elapse before they will have saved that amount. It is, however, obvious, that if they unite their surplus shillings, there will be a pound for him who most wants it at the end of the first week ; at the end of the second week, another may take his turn, and so on; and at the "twentieth week the last man will not be in a worse position than he would had he saved his shillings one by one during the whole time, while nineteen others will have obtained a real benefit. Give this principle a little wider scope, apply it to a Building Society, and you place within the reach of every shareholder the means of improving his condition. Bowkett Societies are not for speculation, but for mutual advantage. So economically are they managed, that, we are assured, the actual expense to each member on the dissolution of the society at the end of ten years, will not have been more than one penny per week. Of course he pays for the property purchased, but his other subscriptions are only lent to keep the society in action, and are in all cases returned to him. We have thought that a brief notice of Building Societies would be acceptable to the readers of the Family Economist; in closing our remarks, we must again recommend the exercise of caution, as attractive advertisements, written by glib pens, are every day making their appearance, and are calculated to entrap the unwary. Parties desirous of information would, perhaps, do well to write to Mr. Bowkett, or to any of the acting Secretaries of the societies managed on his principles.