A member desiring to effect an immediate purchase of a house or property may borrow the money required by depositing the title deeds with the society as security, and repaying the loan by instalments, monthly or quarterly. Or if he elect to build a house himself; he deposits the deeds of the land with the society and takes up a loan by instalments as the work proceeds. In this case an architect or surveyor would have to give a certificate from time to time to the effect that so much money could be advanced upon the work actually done; and the repayment of the loan would only begin when the house was finished. The following table shows the repayments required, including interest for each 100 advanced:

--------------------------------------------
| Term of years. |  Monthly.  | Quarterly. |
|----------------|------------|------------|
|                |    s. d.  |    s. d.  |
|        1       |   8 14  0  |  26  4  6  |
|        2       |   4 10  0  |  13 11  4  |
|        3       |   3  3  0  |   9  9 11  |
|        4       |   2  8  9  |   7  7  0  |
|        5       |   2  0  3  |   6  1  4  |
|        6       |   1 14  7  |   5  4  3  |
|        7       |   1 10  6  |   4 12  0  |
|        8       |   1  7  6  |   4  2 11  |
|        9       |   1  5  2  |   3 15 11  |
|       10       |   1  3  5  |   3 10  7  |
|       11       |   1  1 11  |   3  6  1  |
|       12       |   1  0  8  |   3  2  4  |
|       13       |   0 19  8  |   2 19  4  |
|       14       |   0 18  9  |   2 16  6  |
|       15       |   0 18  0  |   2 14  3  |
|       16       |   0 17  4  |   2 12  3  |
|       17       |   0 16  9  |   2 10  6  |
|       18       |   0 16  2  |   2  8  9  |
|       19       |   0 15  8  |   2  7  3  |
|       20       |   0 15  3  |   2  6  0  |
|       21       |   0 14 11  |   2  5  0  |
--------------------------------------------

And in like proportion for larger or smaller loans.

In many societies it is a common practice to ballot amongst the members for the right to receive an advance (sometimes without carrying interest) which right may be transferred, for a consideration, to some other member.

By this table it will be seen that a person borrowing 100 for ten years would have to repay the amount by monthly instalments of 1 3s. 5d., or by quarterly instalments of 3 10s. 7d., and if borrowing for a term of twenty-one years, then by monthly instalments of 14s. 11d., or quarterly of 2 5s.

Now, if we refer to the depositor's table of rates, we shall find that he has, for a ten years' term, paid to the society 78, and received back 100; thus receiving from the society 22 (the difference) for the use of the money, plus the interest added. On the other hand, a borrower of 100 for the same term pays back, beyond the capital sum of 100, as much as 40 2s. in interest. Thus there is a difference of 18 2s. between the interest received by the depositor and that paid by the borrower. This constitutes the gross gain of the society on these transactions, but out of it has to be paid the expenses of the office, salaries of officials, and a reserve provided for bad debts, &c.

The social and moral utility of societies established for the direct purpose of aiding a man to become proprietor of his dwelling-house is obvious, and the above calculations seem to show that a society conducted on the plan represented would earn an ample margin of profit for all contingencies.

Doubtless the greater number of the existing building societies, including the one whose figures have been quoted, are conducted in a safe and legitimate manner, but there have been, and may still be, exceptions.

As an inducement to join a building society, people are told that they have to pay, on the instalment system, the same as though they paid the rent of a house, and in a few years will become the owner. A man who has paid for three or four years only what he would have paid for rent, would have very little hesitation in throwing up his contract with the society, if the locality became objectionable to him or the inevitable repairs of a cheap house were more than he could bear. The money borrowed is lent chiefly upon the security of small suburban houses, a kind of property always in course of depreciation, and it may be that the society would have returned upon its hands a number of houses in a bad state of repair and in a deteriorating locality. The instalments having ceased and the houses void, the property becomes a profitless burden upon the society and a probable ultimate loss. When "jerry" builders are large customers of a building society and have some influence, direct or indirect, with its Board of Directors, the evil is greatly aggravated. Whole streets are built with borrowed money, on speculation until, perhaps, there are twice as many houses as can possibly be let.

The society, to protect itself, is bound to continue advancing until it is drawn completely into the net and finds itself encumbered with a lot of unsaleable and useless property. To stave off the evil day when all things must be disclosed to the trusting member, "financing" is restored to, money raised on direct deposit, and advances obtained from banks. The money thus raised tides the society over their difficulties for a time, but it may be that some rumour or report influences members and depositors to withdraw their money, and eventually the coffers are empty and the end arrives.

Unhappily, in the collapse of more than one building society during the last few years there have been revealed frauds and dishonesty of the most flagrant character, and hundreds of trusting investors of the industrial classes have been ruined through the machinations of scoundrels, some of whom posed as philanthropists and ultra righteous members of society. To protect the interests of members and depositors, only men of unimpeachable character and business ability should be elected Directors of a building society, and the audit ought to be of the strictest character. The balance-sheet should present details of the securities upon which the advances are made, and the auditors should certify that they have examined the deeds and identified them as representing the property described in the balance-sheet. Generally speaking, the auditors appointed by the members are not lawyers, and have not the necessary skill for verifying the documents relating to the property, indeed they are not expected to do so. One of the auditors should certainly be legally qualified to ascertain that the securities of the society do represent the properties set forth in the balance-sheet, and he should give a certificate to that effect. If this course were insisted upon, such scandals as have been brought to light could hardly be repeated, where one set of deeds was made to do duty for the assets of three distinct societies, each managed by the same Board of Directors; and the case in which the deeds of abandoned or destroyed property were palmed off upon the auditors to represent securities which had practically no existence. The industrial classes are less careful than those above them in seeing to the safety of their investments, and some legislation seems to be called for to prevent their hard-earned savings being frittered away by bad management or rank dishonesty.