LECTURE ON BUILDING SOCIETIES.

Evening Star, Issue 3544, 2 July 1874, Page 2

LECTURE ON BUILDING SOCIETIES.

The attendance at the lecture on the “ Objects and Principles of the Dunedin Land. Building, and Investment Company (...united),’*’ given at the Lower Hall of the Athenseum on Tuesday, by Mr Urquhart Macpherson, was large. The lecturer commenced by saying it was an imperative duty of the promoters of the company to take all lawful means to diffuse a knowledge among the masses of the working of such a company as this one, which was designed to be a very great social power in the community. There were some half-dozen building societies in Dunedin, some of which had been in existence for many years ; yet not more than two in the hundred of the population had any knowledge of the working of those Societies. This was not as it should be. building societies, with all their faults—and they had many—were deserving of being better known. If duly appreciated, they were susceptible of doing a great deal of good. And, looking at the very limited knowledge possessed by the community of these Societies, though so long established, it was not to be wondered that many had a very vague idea indeed of the chief characteristic .of a new association like the Dunedin Land, Building, and Investment Company. It is believed to be the first of the kind established in the Colonies or in England, and it was on that account that he (Mr Macpherson) was there to explain its principles. It was only in so far as the principles of a company were understood that its provisions would be likely to he taken advantage of. Many, for instance, imagined tljat this new cpmpany was simply a building society. This had been assumed from a similarity of names j but it was a serious mistake. 1 he Dunedin Land, Building, and Investment Society was, in fact, a joint stock company, a building society, and a savings bank, all in one, and each acting aa a feeder to the other; and if people only understood the advantages ®f such a company, ten times the shares at the disposal of the directors would be applied for. Mr Maopherson proceeded to say that, iu initiating a company such as this, there were two leading questions to be solved by the promoters : first, is there need for such a company ; and, second) will such a company pay ? With regard to the first question, it would be conceded that there was a very great need to increase the house accommodation of this City. It was evident that private enterprise was inadequate to meet the want, and building societies had no power to act in the matter. This company was designed to meet the emergency. From the power of association, little understood and less acted upon, the company could put an industrious, steady man, though without capital, in possession of a house of his own. The house would also be of better construction and cost less than if he had money of his own to build with. The company was intended to supply all classes of houses having from three rooms to a dozen. And to meet the requirements of those who wished to invest in terminable shares, the subscriptions to pay for two shares, equal to LlO, would be as low as Is 3d a month, ranging up to 5s 2d, at the option of the investor. The permanent share?, or Class A, being the permanent capital, or, so to speak, the backbone of the company, would bear, of course, the largest rate of interest. Referring to the second question presenting itself to the promoters of such a company—will it; pay ?- thv lecturer said that however beneficial the company might be in supplying the want of house accommodation, the financial results would be of a still more favorable character. If tha company met with a tithe of the success it deserved, it would be able to disclare one annual dividend of from twenty to thirty per cent, on the permanent paid-up capital. This, he said, might seem to some extremely hypothetical, but it was easily accounted for. If, for instance, the funcs derived from the savings bank department and the terminable shares amounted to L4OO, for this the company would pay, on an average, seven per cent., which would b| L2B. Now, assume ™®paid-up permanent shares to amount to LIOO which, together with the L4OQ received i

from the other two sources would make LSOO, employed at twelve per cent., giving to the company L6O profit on the capital employed. By taking the L2B paid as interest for the L4OO, from L6O there would be L 32 left to be divided among the shareholders of permanent shares—namely thirty-two per cent, on LIOO permanent shares. It would be understood that these are mere approximate figures, but sufficiently near to show what rate of interest may be expected by shareholders. It would of course be seen that no provision was made for contingencies, but that would not alter the general approximate result. The security the depositors would have for their money was the very highest that could be given—every fraction of the funds of the company being vested in freehold property. Very great attention was paid to the lecture throughout.