BUILDING SOCIETIES.

Evening Star, Volume IX, Issue 2532, 29 March 1871, Page 2

BUILDING SOCIETIES.

(From the Walvllp Mail.) Nelson claims the honor of being the first City and Province in New Zealand to form a building or Laud Soccty—being founded in January, .ISol. A second was started in the same' City eighteen months later. At the present time there are, or have been, in existence in the Colony thirty-three such Societies ; and fjg tftpy represent a large monetary influence, and form a mode adapted for the investment of savings, the Government considered it expedient to obtain information as to their numbers, mode of working, and the data on which their calculations were based—with a view to further legislation, if necessary. To each i f the existing Societies the Commissioners addressed thirty-two questions ; and thirtyone of such .-'ocieties have given answers to the questions proposed. Why the other two should have refused the required information we have no means of ascertaining Four such Societies exist in the Province of Auck-land-three of which have an aggregate “ income, irrespective of deposits or loans,” of L 13.491 ; one in Napier, whose income is 1.2,000 ; three in Wellington, with income of L 47,031 ; two in Nelson, with 1,8,840 ; two in Marlborough, with L3,3i>(); seven in Canterbury, with l.:-"5,84S; and twelve in Otago, ten of which have an income of £27,972 per annum --all *• irrespective of deposits or loans.” In round numbers, the annual income of the Building and I.and Societies in the Colony amounts to 1,149,000. Six of these Societies only are of a Permanent character—twenty-five being Terminable. Bub it is worthy of notice that in reply to the question, “ Do you consider Terminable or Permanent Societies the better, and why ?” eight answer “Terminaahlc,” "iving various reasons ; one in Auckland, however, says, “Terminable for borrowers ; Permanent for investorswhile Otago Freehold Society’! remarks, “Terminable fqr investors ; Permanent for borrowers.” One Society rejoins “ Bpth equally good fifteen answer. ' “ Permanent and five express no opinion. It will be observed that experience has taught the wisdom of establishing “ Permanent ” Societies in p emrenco to those of a “ Turn inable ” character. The contributions to shares vary from 10s Cd to 2s per month; while the amount or dividend payable in respect of each share at the termination of each Society ranges from L2O to LI2O. A gr at dissimilarity is, however, shown in the different calculation* that have led to the date being fixed when the shares will become payable—the expected re nit being defined Thus, we have six Societies whose monthly subscription for each share is five shillings—two of which, charging 12 per cent, ou realised

shkrfestesSfeaptlo obtain LCO per share in 7f yeatfey onMHmes to realise LSO per share m the same amount m ten yearsr-thejnterest being the same ; and the sixth, sfttne amount “when realised.” 'We; : nojbjfoe ' one Society paying 2s 6d per moiittv■■■'for nine years expecting to realise L 25 per shave ; and another paying 3s per month expects to obtain 1-20 per share in eleven years the interest charged being 10*10 and IflJ per cent, respectively. One society pays 10s per share monthly, charging 6 per cent, interest on realised shares, and the “expected result.” is Ll2O in “ ten years or less two contribute 10s 6d monthly, charge 3 3 - 5 per cent,, and expect LIOO in 7'i years. It will be rather singular if the expectations so varied are all realised. Local Circumstances have some influence, of course ; bat whither of sufficient power to obtain such varied results remains to be seen. These c 'o cicties, in round numbers, are composed of thirty thousand shaves, expected to realise at their termination one million, and.a quarter sterling—or about forty-two pounds per share. From the short period some of them have been formed hb certain rule can be laid down as to the ratio of shares realised. When advances are made'to'sliareholders, ten of the companies sell the shares sought to be realised by auction; the others charging varying rates of interest and punierbus monetary cbnsidieratioils. ' : / , , ' - Ini answer to the question, “Do you consider the pecuninryndfessitieS of ‘shareholders frequently lead them'to bid too high a discount at the salo of sliare#?V the unanimous answer, where experience has boeh gainedj is almost in the affirmative-^oiie Society in Kaiapoi saying “ No v v afad another in Christchurch, .“ Id -this Society, ;No.” To counterbalance this negative evidence, the “Wellington Mutual Investment Society” replies, “ Yea; after an experience of twentyfour years and the “ Marlborough Building Society,” “Yes, decidedly; on one occasion 314 per cent, given.”

Some of the societies make advances on ordinary mortgages, without shares being realised: and to individuals not holding shares, both on freehold and leasehold property. Others lend money only by realisation of shares to shareholders only, on freehold property. It would appear it is not made by all the Associations imperative for property to be .insured against risk by fire. The general Inode pf proceedure in cases of default seems to be 1 that “ in the event of a sale of mortgaged property, l -the defaulting ■mortgagor gets credit for a share of the pro tits, as a mortgagor realising his security.” Borrowing members are generally allowed to be members of committee and directors; and wrheu money is needed to be borrowed it is obtained from the Association’s banker, Half the societies receive “ money by way of deposit,” paying interest ranging from 5 to 8 per cent, per annum. “The yearly statements of piofit and loss 11 : are subject to the same variety as characterises the details of the societies generally. No uniform plan is adopted. ‘ ‘ Few of the societies have any satisfactory or intelligible inode of oscer? tainiojog their true position. l ’ From the evidence obtained the Commissioners draw the following conclusions ; 1. That existing societies, to a largi extent, are not proceeding on reliable c ilcu’ations. ■

2. That the diversity in forms and modes of oner .tion is so great as to moke it impracticable and undesirable to obtain un : - formity by legislation. 3. That there is at present no safeguard against delusive schemes, should such be proposed They recommend that a Bill may be submitted to the Legislative for the regulation of Land and Build ug Societies, confined to the following points : 1. To consolidate, the [.and and Building Societi-s Act, 18GG and ISd!).

2. To prohibit the sue of shares by auction or tender, and to require that in every ease the full nominal value of the shares shall he advanced without premium being charged or deduction made. Tiiis provision not to apply to existing .Societies.

3. To provide for am| authorise the winding up of Societies where and if it may be necessary or desii able to do so.

4. To appoint an Inspector, whose duty shall be—(i) To examine prospectuses and tables of all Land and building societies, and certify as to their correctness and suitability for the'r intended purpose. N<> new Society to Ire registered until such certificate is given. (ii) To receive annually from every Society in tire Colyqy, a statement of its operations and position,^alsq qf its assets and liabilities, and to ermine and report thereon to the Colonial Secretary, Such statements and reports to he published in the New Zealand Gazet'e, and in the Gazette of the Province or County in which the office of the Society may be situated, (m) To control the power of borrowing given to all such Societies, so as to insure that it shall only be exercised in conformity with the Act or Acts by which such borrowing is authorised. (iv)'To furnish periodically, when requested by any Society, a table or tab’es showing the rates at which its rates may he withdrawn, and also at which its mortgages may be cancelled, (v) To approve of any proposed scheme for winding up a Society; such approval to be necessary before the winding up shall become lawful.