BUILDING SOCIETIES.

Evening Star, Issue 3605, 11 September 1874, Page 3

BUILDING SOCIETIES.

To the Editor. Sir, — 0 here are few who have a knowledge of the working and appreciate the benefit conferred on the community by building societies, but womd be sorry to see the result of four years’existence of one < f these institutions as reported in the papers. Tt will be matter c-f surprise to some that in the present enlightened age on the principles of finance a society should have been started so recently on what is known as the terminable plan. Assuming the correctness of the report, the society ought to have been dis solved twelve months ago, or its constitution altered. Theoretically the plan of a terminable society is sound enough, but it has been proved over and over acain that it is all hut impossible to carry out the theory. Apart from many other objections that can be urged against this class of institutions, the uncertainty ot their duration, which the roost careful calculation cannot definitely fix. gives them a certain speculative character, which a benefit society ought not to possess. This undesirab’e element is altogether absent in the permanent societh s. And although a permanent building society is not all that could be desired, their usefulness is very great, and the drawbacks they are subject to lie more in the Act under which they are constituted than in the societies themselves. Intrinsically, they afford to their shareholders a better security than does any banking institution. In this respect the only advantage a bank has, is the fact that its affairs are conducted by gentlemen thoroughly trained for the particular work they have to do; such unfortunately, not bring always the case with the building societies. But what E wish more particularly to refer to is the ha’anee sheet. A statement of this nature is professedly for the purpose of giving he members a knowledge of the position of the affairs of the institution to which they belong. For snch a purpose the statement before us ia perfectly useless, being beyond the comprehension i f all but experts. The m'staka in this, as in other instances of a like nature, is to make out all balance statements. in the one stereotyped fashion—whether the subject be the affairs of a London mercha-it prince or a West-end chimneysweep—they must all hove their traditional technicalities, conveying to the general reader the idea of confu-ioa worst confounded. In the present instance the figures are all, without doubt, perfectly correct. But they rive i o clue to the financial position of the Society. The audit, with the exception ot certifying to the correctness of the receipts and disbursements, is not worth two straws Indeedit is not only inutile but actually pernicious. It stamps with its fit aneironeons way of stating the matter, which is apt to lead the uninitiated to imagine a profit has been made, whereas the reverse is the case. The item L2,9:.»3 10s 101, to the profit and loss account, ought not to have appeared in the form it does. It is not a profit at all. Had the statement been that of an ordinary mercantile firm, the I 2,993 10s 101 would have been in its proper form, and would have shown a true net profit to the concern. Hence the liability to mislead The audit of a society Ike this mustbe cfavery different naTire from the usual conventional audit, if its true po ition is to be ascertained What is warned is an audit on something of the plan adopted by properly-managed Life Assurance Companies, to ascertain “present” values, &c.—l am. &c., U I'QUHART MaCPHERSON. Dunedin, Sept, 11.