BUILDING SOCIETIES AND THEIR BENEFICIAL EFFECTS.

New Zealand Tablet, Volume II, Issue 102, 10 April 1875, Page 11

BUILDING SOCIETIES AND THEIR BENEFICIAL EFFECTS.

The very urgent demand for house accommodation, and the exorbitant rents ruling, consequent upon our rapidly-increas-ing population, makes any scheme a matter of public interest which will have for its object a remedy for so pressing a want. The success which has attended the establishment of building societies in this and other cities, is too well known to be enlarged upon in our columns. Independently, however, of the real tangible benefits conferred upon shareholders when the tune of winding; up arrives, they are powerful incentives to -the inducing of habits of saving and thrift, and a forethought for a future day; in many cases where, but for such inducement, no such provision would have been made., But, beside 'Providing a home on easy terms for those persons whose limited means would prevent them otherwise acquiring one, they are the very safest and most remunerative means of investment, offering as they do such decided advantages to the ■capitalists over banking and other inatitutions. To our mind however, the latter consideration is but of minor importance' and sinks into insignificance when the incalculable amount of good which they are the means of accomplishing amongst the struggling classes is borne in mind. To the hard-worked artisan, who is called upon to pay for rent a sum equivalent to about one-fourth of his entire wage, they offer a home which will be free from the visit of the landlord, for very little in excess of the amount which he is called upon to pay for a temporary occupation. Upon the old system upon which building societies were based, there were set scales for repayment of money borrowed, making its extension over the full term during which the company was to be in existence compulsory, thereby materially increasing the amount of interest upon the sum borrowed. So tliat a person who had obtained say £300, and had elected at the start to pay £2 per month, was forced to continue at that rate until the principal and interest had been cleared off, although he found himself in a position to return the loan, either in a bulk sum or by increased repayments. This defect has been admitted and a remedy applied, and in societies whose formation are of recent date provision has been made for the contingency adverted to. It is a matter of fact that when once a start has been made towards making provision for the future, people become actuated with a strong desire to add to their store : and having once commenced, many domestic sacrifices are made for its continuance, where under other circumstances, the money thus wisely put by for a rainy day might have been foolishly frittered away. To the unfortunate teaant— placed as most I are at the present time at the mercy of the landlord—building societies hold out special advantages, and place it within the reach of each person in the community of dwelling beneath their own roof. Indeed, with the special benefits and material aid to be received from such institutions, it,is a matter for wonder that persons will continue, year after year, to pay heavy rents, when it lies within their power so easily to sit beneath the metaphorical fig-tree. The foolishness of such a line ot pohcy can be shown in no better manner than by taking the following supposititious case :— For instance, a person who has been paying £1 per week as rent, borrows from a society £300 at the rate, say, of 10 per cent. With the money so obtained he erects a house, and so lives rent free The sum borrowed is paid at £2 per week, or £104 per year in addition tn the interest* being 12s per week, or £30 for the first year; or £20 for the second year; and 4b, or £10 for the third year, being a total of £60 interest. Had he however, continued to pay the £92 rent during th« three'

years, it will be found that he would have paid away £156, so that in receiving the loan, even at a high rate of interest, he has accomplished a saving of £96 by the transaction.. With such decided advantages within grasp, it is somewhat surprising that such societies are not more liberally patronised than they are, and we would recommend our readers to the serious consideration of the benefits to be derived on such accommodating terms.