PAEROA BUILDING SOCIETY.

Hauraki Plains Gazette, Volume XXXIII, Issue 4387, 8 March 1922, Page 2

PAEROA BUILDING SOCIETY.

GOOD PROGRESS MADE. PROVISIONAL DIRECTORATE. On Saturday evening a number cf business men met in the “Gazette” Office to discuss the prospects ol forming a co-operative terminating building' society. There were pre-, sent: Messrs E. W. Porritt, J. L. Hanna, A. Steedman, P. E. Brenan, D. Brown, W. Marshall. W. D. Nicholas; H. G. Somervell, C. J. Curtis, G. Lamb, Arch. White, and E. Edwards. Mr W. D. Nicholas was voted to the chair, and explained the action he had taken in calling the meeting. He firmly believed that such a Society could be started in the town if the necessary organisation work could be put into it. Mr Porritt detailed what the Chamber of Commerce had done just prior to the outbreak of the Great War in the matter, but’ the war coming on prevented any further action being taken. Mr J. L. Hanna explained the working of a co-operative building society, and was able to give s'ome interesting details relative to the Thames society. - After a good deal of informal discussion had taken place Mr. P. E. Brenan moved that a society, to bo called “The Paeroa Co-operative Terminating Building Society,” be formed. This was seconded by Mr E W. Porritt. and carried. ' It was decided that the number of groups be 10, representing 1000 shares each. • Messrs Porritt, Hanna, and Nicholas were appointed a sub-.committee to draw up rules and report to the provisional directors. It was decided that the provisional directors be nine. On the motion of Mr Marshall, seconded by Mr Brenan, the meeting decided that it be a rule precedent, to the formation of the Society that no honorarium be paid to the directors for the first year. The following provisional directors were elected: Messrs Nicholas, Porritt, Marshall, Hanna,- Brenan, Brown, Edwards, Lamb, and Curtis. 'Mr Nicholas was appointed convener. Mr J. L. Hanna was appointed to lay the matter before the Chamber of Commerce, and ask for its cooperation in the matter.

CHAMBER DISCUSSION. The matter was discussed at last night’s meeting of the Chamber of Commercei being introduced by the president, Mr E. W. Porritt. Mr Cassrels explained that Mr JaS; Copper asked him to get data in Auckland. This had been done. Unfortunately, Mr Coupee could not get to the meeting that night. Mr J. L Hanna then read the fob lowing letter: At the request of a meeting of those interested in the formation of a Paeroa Co-operative Terminating Building Society held on Saturday last the writers were deputed to put the position before the Chamber, with a view to securing their co-operation in *'he movement. Twelve business men met and discussed the matter, and it was decided to form a Paeroa Co-operative Terminating Building Society, and nine provisional directors were elected as follows: Messrs E. W. Porritt, W. D. Nicholas, WMarshall, J. L. Hanna, P. E.Brenan, D. Brown E. Edwards, G. Lambi, C. .T. Curtis. Shares should, in our opinion, be of the borrowing value of £2oo’each; that is to. say, that if a person held two shares and drew an allotment ne would be entitled to receive £4OO on giving security to the society. We are of opinion that the groups should not exceed 10, and should, ■represent 1000 shares in each group, the payments in respect of shares to be as follows : -2s 6d on application as an application fee, and payments to be at the rate of Is per week per share, payable fortnightly, and that the directors be entitled to levy such sum as may be required at the end of each year for working expenses. The rules usually provide that share-t holders shall pay a sum of 2s per share for working expenses, or such other sum as . the board of directors from 9me to time may fix. We also consider that no member should be Entitled to take more than 10 shares, it being the idea that the Society be as far as possible cooperative. The application fee of 2s 6d per share should cover preliminary expenses, but in case the number of shares are not taken up those present at the meeting on Saturday 'last agreed to guarantee £3 per head towards preliminary expenses on condition that the total number of guarantors was brought up to 25. Steps are being taken to obtain the other guarantors. Appropriations would be made alternately by ballot and by sale. By this is meant that appropriations bj' ballot would be as is known in the general sense with regard to building societies ; that is, the draw would be made and the persqn who drew the lucky marble would secure the appropriation, subject, to his providing a security satisfactory to the board of directors. Should he, however, not wish to avail himself of the loan, he will be at liberty to sell same to whomsoever he may wish'and retain the money paid for the loan which' would be free of interest..

An appropriation by sale means that tenders are put in by any person who so wishes, stating the amount he is prepared to give for appropriation, and at the first appropriation by sale thereafter the highest tenderer becomes the purchaser of the loan wltln out interest. This 1 borrower then gives a mortgage to the Society fpr the amount plus the amount of the tender for interest, but otherwise free of interest; the borrower may, however, by paying cash for the amount of tender, get a reduction-of 20 per cent, on the basis that, the money paid now Is worth 20 per cent, as against being repaid by instalments over 1114 years, and this should be taken into consideration when a person is buying from another person who, has drawn an appropriation by ballot, on the basis that, having had to pay cash tn tbn drawer <’’’ the appropriation it should be worth 20 per cent, less

than in 11% years by instalments. Provision is also made that shareholders cannot withdraw the amount paid in until after five years, but on the firet day of the sixth year the person may give notice that he desires to withdraw the amounts paid in. and such persons are then paid out in the order that their applications are received, but repayments in this connection are only repaid out of redemptions on loans. If a person leaves his money in totten years he may receive one-third of the profits on the shares/ and if they remain in for fifteen years he- may receive one-half of the profits on the shares. The different items that go to make up profits on the shares are Tenders received off sale appropriations, and the amounts paid on forfeited shares. In the Thames Society, which has been in existence about 14 years, there are three groups, and in group 1 now there are 225 shares, 94 of which have received appropriations, and the 225 shares participate in profits amounting to £2821 Ils Id, or equal to £l2 10s 9d per share. The total appropriations since tne inception of the Thames society amount to £51,753 7s 9d, which give a. very good indication of what amount is put out in a period of! 15 years bj- a society whicli should be no larger than our own. - To make the position clear as to how the money is raised, we would point out that each shareholder is required to pay. 19 per week per share, payable fortnightly. If, therefore. a person took two shares ne would be paying 4s per fortnight, or, in other words, £5 4s per annum. On the same reckoning 1000 shares would produce £2OOO per annum, which’ sum 1 should be available to lend out on mortgage. As soon as.£2oo was actually in hand the Society w'ould advertise a ballot or sale appropriation, as the case may be. it having been discovered in practice that by the time the necessary valuation has been made and the legal documents prei pared the other £2OO would have been received by the l Society, and by such a means the money is kept more continuously in circulation, in so much that there are not longer periods between ballpts. If the whole of the 1000 shares were taken up there would be approximately £lOO a fortnight coming into the funds, and 'it is hardly, likely that the valuation and legal documents would be ready earlier than a fortnight after the ballot, ano In most cases it would likely be a month before everything was in order to pay out.

The advantages of a building so-, ciety are: That persons may obtain money free of interest, and, further, that money may in limited sums be at all times available on loan. In these present hard times it is very difficult to obtain money at. all, no matter what security is offered, but with a building society, receiving its money in small subscriptions which do not hurt the subscriber, there is always the ready .money available. Furthermore, subscriptions to a building society are a' good investment, particularly from the point of view of .a compulsory saving. Practically no person would feel a subscription of 2s per week for his IFetime, even without any profits, but when profits are . added to the shares it becomes particularly pleasing. 1 Of course there are cases of persons who will discontinue their payments before the end of the five years, and in such cases the remaining shareholders would receive the benefit of the amount that they have paid in, but from the compulsory saving standpoint it is unlikely that a, person, after paying in for a year, is likely to willingly lose the amount ne has already paid in for the sake of discontinuing the payments of 2s per week, and therefore will continue on paying - because he is compelled to do so or lose what he has paid in. • It is also a good proposition for children. Children may hold shares and deal with them. A child receiving Is per week pocket-money could very advantageously be taught the lesson of thrift by paying the Is towards building society shares. By the time the child reaches comparatively mature years a considerable fund of probably £7O or £BO would have accrued as payments only, without taking into consideration any profits that may have accrued to the shares., , _ ' Not only this, but the child or adult shareholder has the possibility at each appropriation of drawing an appropriation, which would be saleable at fram £BO to £9O, or possibly even as much as £l3O. I We have gone into the matter at some length, and will be happy to answer any questions at the Chamber meeting, and trust that you will give the proposal your hearty co-operation. -W, D. Nicholas,. J. L. Hanna. Mr Leach moved : “That this Chamber supports the building society movement.” —Carried. Mr J. T. Brown thought a public meeting should be called, which view Mr L. Cassrels supported. Both speakers said the success of such a society depended on public confidence in it. and in the directorate. Mr J. T. Brown proposed, and Mr Whitten seconded, a motion that the matter be deferred until next meeting. Mr Brown thought the secretary of the Chamber. Mr Couper, should have an opportunity of presenting his report before the matter was proceeded with.