Show Wage age Earner amer Tells of Gr rasping Grasping Policy of Building and Loan Limited Savings Compared With Compounding Compound Compound- ing by Savings Banks More Than Doubling Doubling Doub Doub- ling Principal in Ten Y Years ear By WILLIAM Some of ot these building and loan associations escape payment of In Income Income income in- in come taxes to the government by masquerading as mutual societies They have a unique method of as assisting assisting assisting as- as members in building homes Barring the high rate of Interest charged which seems to be popular at 12 per per cent a year by most of these companies there is yet another another an an- other method of Increasing this rate ride by inducing the loaner to take takeout takeout taker r out an additional building and loan Instalment contract In the association tion From casual Investigation it appears that this is merely a form of making a brokerage charge on the loan In the case of a pure purely mutual company where loans on real es estate estate estate es- es tate are made only to members and the stock in the society Is put up as additional security for the loan as well as the first mortgage on the property a stockholder applies for tor a loan and it goes before beCore a committee committe which makes the de de- de The prospective home purchaser pur pur- chaser chaFer In in a addition to getting gettin his Iris loan to ouy his home gets expert exert advice on the value which the keen and experienced men serving without remuneration on the board ca can n give relative to t the l value of ot the tho home he is purchasing It i is Ii purely a mutual transaction A typical example of how stock selling profit grabbing building and loan associations that are reaping a n rich harvest by capitalizing on th the high reputation of ot all mutual societies and going so far as to fail fall to tile file Income taxes under the claim that they are mutual companies companies com corn panics are able to further gouge e the public when loans are asked for the purpose of establishing homes Is contained in the following letter received by The Telegram IRONCLAD SECURITY 1 have ha been very much Interested interested interested inter inter- ested in your jour our articles appearing In InThe inThe inThe The Telegram because I 1 am unfortunate unfortunate unfortunate un un- un- un fortunate enough to be in the B Building and Loan company company com com- pany patty to the extent of 1200 I signed one of their contracts contracts- In InJune InJune i June June Kand- Kand and paid 25 a month until October mS This is a contract tract In October 1925 I 1 went t to their office to get information about the tle loan part of the contract for those who wish to build homes On the money I 1 had had paid in they would loan me 1000 and as the building neared completion they would loan additional money from time to time But In order to procure this ad additional additional additional ad- ad they of course take a mortgage op the entire property and I must sign another contract contract contract con con- tract in connection with the original contract The payments Ja ment on these two contracts together together- with witha a reasonable rate of interest would amount to approximately per month for seven years ears and 25 a month for three more year years At Atthe Atthe Atthe the end of ten years the home would be paid for and In cash would be saved which saved which is fine but what hat wage earner would dare risk obligating obligating I gating himself for seven years for tor I monthly p payments of It seems to me that giving them a mortgage should be sufficient without without without with with- out signing for Or the additional Another thing their salesman assured assured as assured as- as me that If any time after the year two-year period I needed mone money I could take my certificate to any I bank and they would be glad to give me full value for the amount of I money I paid In If It their own company company com com- omI om- om pany will not return the principal I certainly a bank will not do so Their I s salesmen ar are a authorized rep rep- and should know the truth about the company A copy of the contract signed is not left with the signer and It Is therefore necessary to to- more or lees leBS depend upon the word of the salesman I State law V should be enacted to I regulate the the amount of ot interest charged b by these companies and I 1 sincerely hope hop that through through the the ef efforts efforts ef- ef forts of The Telegram this will be i accomplished II ALLURING PROMISES This letter was written by a young oung woman working In a stenographical position for a local company It gives a splendid Idea of how Some Borne of these building building- and loan as association associations associations as- as have operated Great ado adoIs adoIs adois Is made of the fact tact that their one purpose In life is to build homes for fori i iL community and at the same time assure a safe sate Investment for the in instalment instalment instalment in- in contract contract stockholder Yet this building and loan association would lead a young oung woman working for tor a salary to obligate herself for seven years to pay approximately a month and 25 a month for foran foran foran an additional three years taking a i. i first mortgage on her property to secure a loan of This concern escapes paying the federal i Income come tax required of banks business firms and Individuals by claiming to be an old time mutual company Now if this young woman whom I Ithe the building and loan association urged to involve herself into contracts contracts contracts con con- tracts and notes that would obligate her to pay a month for seven years and 25 25 a month for lor three thre years should put that amount of money into a savings bank and let interest at 4 per cent compound regularly regularly regularly reg reg- every six months at the end of her ten years she would have a alance balance in the savings bank of 10 And the money in the bank banI would be available to he her any time she desired to take her passbook and request it It gives an idea of what compound interest amounts to and when building and 10 loan n associations associations associations say that the principal paid into the association in in monthly in instalments instalments in- in in- in will almost double in Continued oi on page 8 4 X i i. i W Wage g Earner T Tells of 4 Grasping Policy of Building and Loan Continued from page 1 1 months as one official of a building and loan loom association told a widow when she wished to withdraw and found she was was out almost half of her mane money paid in in less all interest it would have earned it doesn't mean mian so much as the tho regular payments pay pay- ments in a savings bank will soon I up into a largo large sum POOR INVESTMENT These figures a month for fol seven seven years and 25 a month for three years were presented to a savings bank of Salt Lake with the request that it figure out how much it would amount to at the end of the year ten period if allowed to re remain remain remain re- re main in the bank with the 4 percent per pel percent cent interest compounding every six months The bank figured it to be Had this been placed in one of tho the old mutual societies which pays 6 per cent with the privilege of drawing out at any time with no forfeitures it would have piled up much more moro rapidly being oe one conclusive proof that the tho loan privileges of these building and loan Ioan are ari about at as I poor Ioor pooran pooran an investment for fol the individual as the original instalment contract it not much more so for fol by continuing continuo ing through maturity with the con cony contract contract tract the chances are the investor will get the matured value of his contract t. t It must also be remembered that If a person should be foolish enough I to sign a contract such as was In Introduced introduced in- in tro to this young oung woman that In case of that persons person's death besIdes besides besides be be- sides the mortgage hanging over ovet the property would also be the in instalment instalment In- In contracts for stock in the building and loan association cancellation cancellation cancellation can can- ol of which would result In Ina ina a high withdrawal charge and probable probable abl able loss of the mortgage and the tho property INSIDERS ENRICHED It seams seems evident according to the there I re record ord of the past few years that I sortie some building and loan associations f this character are operated to enrich the Insiders and people are ate sold the tie Instalment nt stock for Cor no other purpose A former salesman for one of ot these building and loan associations states that a short while ago the secretary tary of oC the National Association atlon aton of ot Building and Loan associations in a talk before the local building and loan people boasted bonsted that only 15 per cent or of the instalment instalment ment stockholders went through with their contracts to maturity One business man who has Investigated investigated investigated gated these associations in Utah re reports reports re- re ports that he found here in Utah that only 9 per cent of the contracts signed up lip were ever carried to 10 maturity ma ma- And that's where the Insiders Insiders In siders reap their harvest It Is the tile duty of the next state legislature legisla ture tUt to Pass laws lawR that will make withdrawal awal chu charges chaises eR not more than 1 per cent of the matured value of ot the contract I Continued tomorrow |