ously mortgaged. Through this means much loss has been sustained. It is not presumed by the committee that the trustees, in making loans under such circumstances, have acted in bad faith. It may have arisen, in some instances, from gross negligence; as for instance, in the Knickerbocker Building Association. In the majority of cases, however, the committee believe that the trustees who have permitted loans upon second mortgages committed an error of the head and not of the heart.' The losses from this source, however, are not so great as might be expected.

In order to secure promptness on the part of shareholders and borrowers, in paying the monthly instalments, in our supposed association, a system of fines is established. It will be perceived by the second section of the Act before referred to, that something of this kind was anticipated, and every association was clothed with power to fix by its by-laws, the fines and penalties for non-payment of dues or fees.' The sliding scale seems to have been generally adopted, together with a proviso, 'that all shares on which no payment has been made for six months, may be forfeited.' By the operation of this rule, a mere shareholder who was in arrears for six months, might be compelled to lose whatever he had paid in; but a person who had made a loan would be under far different circumstances. He would find his property not only embarrassed for an amount nearly double of what he had realized, but upon this would be accumulated the dues and fines for his delinquency. From the operation of this rule much complaint has arisen.

We will give our supposed association another feature, viz.: the right of a shareholder, from sickness or misfortune to withdraw, in case the trustees permit it; for this is the spirit of the by-laws of four-fifths of the associations now in operation. From the operation of this rule much complaint has arisen.

The foregoing outline of an association and its management does not embrace all the peculiarities of building associations. Enough, however, are given to make clear the complaints and the motives by which complaints are actuated. The committee speak with confidence upon this

point. The public manner in which their investigations have been conducted, has enabled them to reach every alleged grievance. Every complaint has received patient attention and thorough investigation. Wherever it was possible, the officers, or board of officers charged with any wrong have been brought before the committee, and the particular charge stated for explanation. Besides this, each association has been required to furnish a general statement of its mode of doing business and its financial condition. A great share of the labors of the committee appear by affidavits and proofs herewith submitted. But a greater share—and which consisted in a personal inspection of books, the examination of by-laws, investigation of complaints not deemed of sufficient importance to reduce to writing-could not well be made to appear on paper, and yet, from the very nature of the case, must form a portion of the basis of their conclusions.

The complaints may properly be classified as follows: 1st. From redeemers, or persons who have borrowed. 2nd. From shareholders wishing to withdraw.

The motive for the first class is to be relieved from further burdens, and the motive for the second class is to secure what they can. The reason which makes it a burden for the borrower to pay his monthly dues, is his discovery that he must continue this payment until long after he has paid eight hundred dollars in amount, and the interest thereon. The reason why the shareholders wish to withdraw, is the discovery that what he makes is some one's loss, and by the most skillful management, such as to prevent loss to any one, his monthly deposits are at best but so much saved, with a small interest to be added. Under economical management, with no fluctuation in trade to affect the steady earnings of labor, it can not be denied that these associations would be equal in benefit to the ordinary savings bank. For a depositor to accumulate faster than at some legal interest, some partner or shareholder must discount or deduct a portion of his own share. These associations are formed on the supposition that most of the

shareholders will do so. In no other method can the mere depositor of his monthly dues make any profit in the transaction. There is no legitimate system of loans of money, by which an individual, by the prompt payment of three dollars monthly for eight years (that being the length of time generally supposed in 1851 to have been necessary for an association to make its ultimate dividend) could realize the sum of eight hundred dollars. It is not, therefore, very strange that the discovery of this fact by a person who, under the influence of an all-pervading infatuation, had heavily encumbered his property for a trifling consideration, which consideration would all be refunded in eight years, should feel more and more anxious in regard to his burdens, by so much as the prospect became more distinct that the eight years of faithful payment of dues was but the beginning of his effort to obtain a house' and 'a home.' Few would murmur at any bearable burden, for a definite period, if the reward was adequate.

Besides these complaints, mismanagement has been charged. In the Knickerbocker Association great discontent has prevailed, and not without reason. It is but justice to say that an entire new board of officers is now selected, who manifest a determination to retrieve, as far as possible, the embarrassments entailed by their predecessors. In this connection, it may be well to remark, that for evils in the management of these associations the members have the remedy annually, by the selection of a new board.

At present nearly every association is in process of winding up its affairs. But one or two make any loans whatever. The method pursued to close (for none are able to divide the amount first proposed) is not the same in all. In some the ultimate value has been reduced. In most the receipts are appropriated to paying off persons wishing to withdraw.

It will be seen that all can not withdraw at once, and hence in some associations the receipts are put up at auction, and the person who will take the smallest sum for his share is first paid off. In most associations, however, the full sum is returned, with an interest varying from five to

ten per cent. To determine who shall first be paid off, the secretary keeps a record of applicants for withdrawal of shares, and these are paid in the order recorded.

From this brief view of the complaints and their causes, without any extraneous evidence, it might be correctly inferred the secret of all is in the system. The cases of individual hardships which have come to the knowledge of the committee, and some of which are noted in the testimony herewith submitted, are precisely the same as are happening in all the relations of trade. In none of these, if the same grievance has been felt in a private transaction, would a murmur have been lisped. Men who ignorantly embarrass themselves, keep their sorrows to their own conscience and profit by the lesson which experience teaches.

In coming to a conclusion as to the duty of the Legislature in this matter, the committee is embarrassed by the fact that these associations are all voluntary. That the burdens, liabilities and responsibilities are voluntarily assumed. That while it is manifestly the duty of government to protect the weak against the strong, that any legislation tending to distinguish between the liabilities of persons on the basis of mental capacity, or to relieve the improvident from the just consequences of voluntary acts, must ever be liable to objection. Yet, that something is demanded of the Legislature in this instance, is apparent from the fact that the principle of legislation in the matter was established by the passage of the Act of April 10, 1851. Under the impression that that which conformed to the provisions of law, must be all that its advocates asserted, it is probable that thousands of persons of limited information have invested their little gains in these associations. The testimony reveals the fact that of the subscribers, the great bulk are in the humble walks of life. That included in the number are sewing girls, apprentices, widows and married women, who are the real head of their families. These classes should never be left a prey to the unfeeling, and no system of legislation should encourage them into a toil in which the dishonest financier might rob them of their earnings.

For these reasons, the committee have come to the determination to recommend a repeal of the act to legalize building and mutual loan associations. In doing this, proper caution should be observed not to inflict a greater evil than is proposed to be remedied. As a rule, the Legislature can not deprive men or corporations of vested rights; but in the Act referred to at Section 15, the right of the Legislature to repeal is expressly reserved. From this it may be argued that all obligations, rights, or liabilities, assumed by shareholders, were subject to the contingency of a repeal at any moment. To guard against any misconstruction, some appropriate reservation should be made in regard to associations now in existence. So far as these are concerned, they are now nearly all in process of closing. This circumstance has also embarrassed the committee. Were they attempting to make loans and to compel payment of dues under these penalties, the committee would feel in duty bound to recommend stringent legislation.

The idea of appointing a general receiver has been suggested. This project, while it has the appearance of plausibility, is open to objections. If it would lessen the expenses, it might, in this view, be not without its benefits. But the committee do not discover that such a step would tend in the slightest degree to hasten-what all are aiming for-to close up their associations.

There is still another embarrassment which building associations are beginning to feel. By Section 7 of the Act, it will be perceived that no association shall be closed until the 'ultimate value' of a share can be divided to each shareholder. On this ground some who have borrowed money from associations that are closing up, by paying back to shareholders their deposits, with a small interest, claim that the association has violated the general law of its incorporation, and hence refuse to pay their monthly dues and interest. To meet this, and all cases similar, the committee would recommend that the action of any association towards closing up, be declared legal and valid, and that any association may wind up at any time, upon a determination of a majority of the unredeemed shareholders so