The associations are capitalized, the members paying a certain sum weekly or monthly until the aggregate amount paid plus accrued interest equals the maturing value of the share, usually $200. Thus the capital of the association is derived from the savings of its members and is increased from month to month. By the Philadelphia plan new series of stock are issued each year. These are paid for by weekly or monthly instalments, the amount of the instalment depending upon the face value of the share and the time until it matures. By issuing shares of varying values and durations the dues can be adapted to all sorts and conditions of people, running as low as $1, or 50 cents, or even 25 cents a week. A person may join at any time by paying the back dues on any shares of the series. A share is given two values: (1) the holding value, which is its actual value, and (2) the withdrawal value. If a member withdraws before the share matures he gets the withdrawal value, which is less than the share's actual value, and by this system of penalties regularity and method in saving are promoted. The Dayton plan also permits new members to enter at any time, but it does not require the new member to pay the back dues on his share and issues a new share with maturity date based upon the entrance date. The Dayton plan does not impose penalties for withdrawal before maturity.
Any stockholder may borrow from the association an amount not to exceed the actual value of his stock, if he can give satisfactory security. When the association accumulates, by payments of dues and interest, an aggregate amount large enough to loan, it is loaned to that member who offers at auction the highest bonus or premium plus the regular interest, the interest being paid along with his dues. At maturity the share of stock which then becomes the property of the association is used to extinguish the principal of the loan. Such a system provides for collective lending and individual borrowing; collective borrowing is not a usual feature.
The system furnishes a concrete training in thrift, with the ideal of owning a home. It offers high rates of interest to lending members; for the association's expense is very low, having to pay no rent and few salaries. It lends small amounts to borrowers on more favorable terms than they can obtain elsewhere, and allows repayment in weekly instalments. To withdraw from the system is easy, incurring little or no penalty. The system gives a social solidarity to the community and reduces the mobility of the population.
In the future probably the aid given toward home-owning will form a less important feature of the system, for to own a home is coming to be regarded among workingmen as a doubtful economy.