Chapter XXXV: Part 35

From the specification and drawings usually an approximate estimate of the cost of the proposed building is prepared by the architect, and the most general method adopted is to cube the building by a multiplication of the length, breadth and height of the building, and to multiply the product or cubic contents by a price ranging from fivepence to three shillings per cubic foot. In the case of churches, chapels and schools, the cost may be roughly computed by taking the number of seats at a price per seat. In the case of churches and chapels, taking a minimum area of 8 ft. each, the cost varies from £10 upwards, the difference being due to the amount of architectural embellishment or the addition of a tower. Schools may be estimated as averaging £9 per scholar; we find that, taking schools of various sizes erected by the late London School Board, their cost varied from £7:12:4 to £10:1:10 per scholar. Hospitals vary from £100 per bed upwards, the lowest cost being taken from a cottage hospital type; while in the case of St Thomas's hospital, London, the cost per bed, including the proportion of the administrative block, was £650, and without this portion the wards alone cost £250. The Herbert hospital at Woolwich cost only £320 per bed.

The bills of quantities are prepared by the quantity surveyor, and are generally made to form part of the contract, and so mentioned in "the contract." The work of the quantity surveyor is to measure from the drawings the whole of the materials required for the structure, and state the amounts or quantities of the respective materials in the form of a bill usually made out on foolscap paper specially ruled, so that [v.04 p.0710] the builders can price each item, together with the labour required to work and fix it, thus forming the building. The idea is to be able to arrive at a lump sum for which the builders will undertake to erect the building. It is of frequent occurrence, in fact it occurs in four-fifths of building contracts, that when a building is commenced, the client, or other interested person, will alter some portion, thereby causing deviations from the bills of quantities. By having the prices of the different materials before him, it is easy for the quantity surveyor to remeasure the portion altered, adding or deducting as the case may be, and thus to ascertain what difference the alteration makes. This method of bills of quantities and prices is absolutely necessary to any one about to build, and means a considerable saving to the client in the end. For example:--Suppose that bills of quantities are not prepared for a certain job by a quantity surveyor, and, as is often done, the drawings and specification are sent to several builders asking them for a quotation to build the house or factory or whatever it may be, according to the drawings and specification. The prices are duly sent in to the architect, and probably the lowest price is accepted and the successful builder starts the job. During the progress of the works certain alterations take place by the owner's instructions, and when the day of settlement comes, the builder puts in his claim for "extras," then owing to the alterations and to the architect having no prices to work upon, litigation often ensues.

Before the work of erecting a structure is entrusted to a builder he has to sign a contract in the same manner as the drawings and specification. This contract is an important document wherein the builder agrees to carry out the work for a stated sum of money, in accordance with the drawings and specification, and bills of quantities, and instructions of the architect, and to his entire satisfaction; and it also states the description of the materials and workmanship, and the manner of carrying out the work, responsibilities of the builder, particularly clauses indemnifying the employer against accidents to employees, and against numerous other risks, the time of completion of works under a penalty for non-completion (the usual allowance being made for bad weather, fire or strikes), and also how payments will be made to the builder as he proceeds with the building. This form of contract is generally prepared by the architect, and varies in part as may be necessary to meet the requirements of the case.

When the drawings have been approved by the owner or client, also by the district surveyor or local authorities, and by adjoining owners, one copy of them, made on linen, is usually deposited (in London) either with the district surveyor, or with the London County Council, another is prepared for the freeholder if a lease of the land is granted, and a third is given to the builder. In addition, in complicated cases such as occur in the city of London, when a building is erected on land which has four or five distinct owners, an architect may have to prepare a large number of complete copies to be deposited with the various parties interested.

The duties of the builder are very similar to those of the architect, except that he is not expected to be able to plan [Sidenote: The builder's sphere.] and design, but to carry out the plans and designs of the architect in the actual work of building. The builder should also know the various acts, and in particular the acts specially relating to the erection of scaffoldings, hoardings, gantries, shoring and pulling down of old buildings. He should have a thorough knowledge of all materials, their qualifying marks or brands, and the special features of good and bad in each class, their uses and method of use. He should be able to control and manage both the men and materials; and briefly, in a builder, as opposed to an architect, the constructive knowledge should predominate.

On large or important works it is usual to have a clerk of works or delegate from the architect; his duties are to be on the works while they are in progress and endeavour by constant attention to secure the use of the best materials and construction, and to report to the architect for his instruction any difficulties that may arise. He should be a thoroughly practical man as opposed to the architectural draughtsman. His salary is paid by the client, and is not included in the architect's remuneration.

American building acts agree in a general manner with those enforced in London. But whereas New York allows the erection [Sidenote: American practice.] of frame or wood structures, while defining a certain portion of the city inside which no new frame or wood structures shall be erected, in London and the large cities of Great Britain the erection of wood frame buildings as dwellings is prohibited. In New York City provision is made for a space at the rear of domestic buildings at least 10 ft. deep, but such depth is increased when the building is over 60 ft. high, and is varied under special circumstances. In London this depth is the same, but the height of the building in relation to the space required in the rear thereof shall be constructed to keep within an angle of 63½ degrees, inclining from the rear boundary towards the building from the level of pavement in front of building; the position from which the angle is taken is varied under special circumstances. In the smaller English towns the building regulations are framed on the model by-laws, and these increase the depth of the yard or garden according to the height of the building.

With regard to the strength and proportion of materials, these are not dealt with in the London Building Act to the same extent as in the New York; for example, in the New York acts (parts 4 and 5)[2] it is prescribed that the bricks used shall be good, hard, well-burned bricks. The sand used for mortar shall be clean, sharp, grit sand, free from loam or dirt, and shall not be finer than the standard samples kept in the office of the department of buildings; also the quality of lime and mortar is fully described, and the strengths of steel and cast-iron, and tests of new materials. Also it is required that all excavations for buildings shall be properly guarded and protected so as to prevent them from becoming dangerous to life or limb, and shall be sheath-piled where necessary by the person or persons causing the excavations to be made, to prevent the adjoining earth from caving in. Plans filed in the department of buildings shall be accompanied by a statement of the character of the soil at the level of the footings. There are also requirements as to protecting adjoining property. The bearing capacity of soils, pressure under footings of foundations, and in part 6 the materials of walls and the methods to be observed in building them are defined. Part 23 deals with floor loads, and the strength of floors constructed of various materials, and requires that the temporary support shall be strong enough to carry the load placed upon them during the progress of any works to buildings. Part 24 deals with the calculations and strength of materials, and wind pressure. Parts 4 and 5 of the New York Building Code are not dealt with by the London Building Act, but the local by-laws of the various districts deal with these. Part 6 of the New York code is dealt with partly by the London Building Act, and partly by the local by-laws. Parts 23 and 24 of the New York code are not dealt with in the English acts at all. In America the standard quality for all materials is set out, but in no English acts do we find the definition of the quality of timber, new materials, steel, &c. Iron and steel construction is in its infancy in England as compared with America, and probably this accounts for no special regulations being in force; but part 22 of the New York Building Code, section 110 to 129 inclusive, deals very fully with iron and steel construction, and this is further supplemented by sections 137 to 140 inclusive.

Sanitary work is dealt with in London by section 39 of the Public Health (London) Act, and the drainage by-laws of the London County Council, in which every detail is very fully gone into with regard to the laying of drains, and fitting up of soil pipes, w.c.'s, &c., all of which is to be carried out and tested to the satisfaction of the local borough's sanitary inspector. The general requirements of New York with regard to sanitary work are very similar with a few more restrictions, and are carried out under "the rules and regulations for plumbing, drainage, [v.04 p.0711] water-supply, and ventilation of buildings." The noticeable feature of the New York regulations is that all master plumbers have to be registered, which is not so in England. The New York regulations have 183 sections relating to sanitary work, and the English regulations have 96 sections. Also by part 16 of the Amendments to Plumbing Rules 1903, the New York laws require that, before any construction of, or alterations to, any gas piping or fittings are commenced, permits must be obtained from the superintendent of buildings; these are only issued to a registered plumber. The application must be accompanied by plans of the different floors showing each outlet, and the number of burners to each outlet; a statement must also be made of the quality of the pipes and fittings, all of which are to be tested by the inspector. In London there are no such laws; the gas companies control a small portion of the work as regards the connexion to meters, while the insurance companies require gas jets to be covered with a wire guard where liable to come in contact with inflammable goods. As to water, the various water companies in England have each their own set of regulations as to the kind of fittings and thickness and quality of pipe to be used, whether for service, wastes or main.

The importance of fire-resisting construction is being more fully recognized now by all countries. In France the regulations [Sidenote: Fire-resisting construction.] for factories, shops and workshops relating to "exits" require that all doors should open outwardly when they open on to courts, vestibules, staircases or interior passages. When they give access to the open air, outward opening is not obligatory unless it has been judged necessary in the interests of safety. If the doors open on to a passage or staircase they must be fixed in such a manner as not to project into the passage or staircase when open. The exits must be numerous, and signs indicating the quickest way out are to be placed in conspicuous positions. The windows are to open outwardly. Staircases in offices or other buildings serving as places for work shall be constructed in incombustible materials, or shall be walled in fully in plaster. The number of staircases shall be in proportion to the number of employees, &c. It is prohibited to use any liquid emitting vapours inflammable under 35° C. for the purpose of lighting or heating, unless the apparatus containing the liquid is solidly closed during work, that part of the apparatus containing the liquid being so closed as to avoid any oozing out of the liquid, &c. &c. Instructions are added as to precautions to be taken in case of fire.

In London fire-resisting construction is dealt with in the London Building Act, and its second schedule, and in London County Council Theatre and Factory Acts, &c. In New York the building code (parts 19, 20 and 21) deals with fire appliances, escapes, and fire-proof shutters and doors, fire-proof buildings and fire-proof floors, and requires that all tenement houses shall have an iron ladder for escape. A section somewhat similar to the last came into force in London in 1907 under the London Building Act, being framed with a view to require all existing projecting one-storey shops to have a fire-resisting roof, and all existing buildings over 50 ft. in height to have means of escape to and from the roof in case of fire.

There are several patents now in use with which it would be possible to erect a fire-proof dwelling at small cost with walls 3 to 5 in. in thickness. One of these has been used where the building act does not apply, as in the case of the Newgate prison cells, London, where the outside walls were from 3 to 4 in. thick only, and were absolutely fire and burglar proof. This method consists in using steel dovetailed sheets fixed between small steel stanchions and plastered in cement on both sides. This form of construction was also used at the British pavilion, Paris Exhibition 1900, and has been employed in numerous other buildings in England, and also in South Africa, Venezuela, and India (Delhi durbar). The use of many of these convenient and sound forms of building construction for ordinary buildings in London, and in districts of England where the model by-laws are in force, is prohibited because they do not comply with some one or other of the various clauses relating to materials, or to the thickness of a wall.

The various details of construction are described and illustrated under separate headings. See BRICKWORK, CARPENTRY, FOUNDATIONS, GLAZING, JOINERY, MASONRY, PAINTER-WORK, PLASTERING, ROOFS, SCAFFOLD, SHORING, STAIRCASE, STEEL CONSTRUCTION, STONE, TIMBER, WALL-COVERINGS, &c.

The principal publications for reference in connexion with this subject are: _The Building and Health Laws of the City of New York_, Brooklyn Eagle Library, No. 85; _Rules and Regulations affecting Building Operations in the administrative County of London_, compiled by Ellis Marsland; _Annotated By-Laws as to House Drainage, &c._, by Jensen; _Metropolitan Sanitation_, by Herbert Daw.

(J. BT.)

[1] The verb "to build" (O.E. _byldan_) is apparently connected with O.E. _bold_, a dwelling, of Scandinavian origin; cf. Danish _bol_, a farm, Icelandic _ból_, farm, abode. Skeat traces it eventually to Sanskrit _bhu_, to be, build meaning "to construct a place in which to be or dwell."

[2] _Building and Health Laws and Regulations affecting the City of New York, including the Building Code of New York City as amended to 1st May 1903._

BUILDING SOCIETIES, the name given to societies "for the purpose of raising, by the subscriptions of the members, a stock or fund for making advances to members out of the funds of the society upon freehold, copyhold, or leasehold estate by way of mortgage," may be "either _terminating_ or _permanent_" (Building Societies Act 1874, § 13). A "terminating" society is one "which by its rules is to terminate at a fixed date, or when a result specified in its rules is attained"; a "permanent" society is one "which has not by its rules any such fixed date or specified result, at which it shall terminate" (§ 5). A more popular description of these societies would be--societies by means of which every man may become "his own landlord," their main purpose being to collect together the small periodical subscriptions of a number of members, until each in his turn has been able to receive a sum sufficient to aid him materially in buying his dwelling-house. The origin and early history of these societies is not very clearly traceable. A mention of "building clubs" in Birmingham occurs in 1795; one is known to have been established by deed in the year 1809 at Greenwich; another is said to have been founded in 1825, under the auspices of the earl of Selkirk at Kirkcudbright in Scotland, and we learn (Scratchley, _On Building Societies_, p. 5) that similar societies in that kingdom adopted the title of "menages."

_United Kingdom._--When the Friendly Societies Act of 1834 gave effect to the wise and liberal policy of extending its benefits to societies for frugal investment, and generally to all associations having a similar legal object, several building societies were certified under it,--so many, indeed, that in 1836 a short act was passed confirming to them the privileges granted by the Friendly Societies Act, and according to them the additional privileges (very valuable at that time) of exemption from the usury laws, simplicity in forms of conveyance, power to reconvey by a mere endorsement under the hands of the trustees for the time being, and exemption from stamp duty. This act remained unaltered until 1874, when an act was passed at the instance of the building societies conferring upon them several other privileges, and relieving them of some disabilities and doubts, which had grown up from the judicial expositions of the act of 1836. It made future building societies incorporated bodies, and extended the privilege of incorporation to existing societies upon application, so that members and all who derive title through them were relieved from having to trace that title through the successive trustees of a society. It also gave a distinct declaration to the members of entire freedom from liability to pay anything beyond the arrears due from them at the time of winding up, or the amount actually secured by their mortgage deeds. Power to borrow money was also expressly given to the societies by the act, but upon two conditions: that the limitation of liability must be made known to the lender, by being printed on the acknowledgment for the loan, and that the borrowed money must not exceed two-thirds of the amount secured by mortgage from the members, or, in a terminating society, one year's income from subscriptions. Previous to the passing of the act (or rather to the judicial decision in _Laing_ v. _Read_, which the clause of the act made statutory) there had been, on the one hand, grave doubts on high legal authority whether a society could borrow money at all; while, on the other hand, many societies in order to raise funds carried on the business of deposit banks to an extent far exceeding the amounts used by them for their legitimate purpose of investment on mortgage. It enacted, that if a society borrowed more than the statute authorizes, the directors accepting the loan should be personally [v.04 p.0712] responsible for the excess. By an act passed in 1894 all the Benefit Building Societies established under the act of 1836 after the year 1856 were required to become incorporated under the act of 1874.

There are, therefore, three categories of building societies:--(1) Those established before 1856, which have not been incorporated under the act of 1874 and remain under the act of 1836. (2) Those established before 1874 under the act of 1836, which have been incorporated under the act of 1874. (3) Those which have been established since the act of 1874 was passed. The first class still act by means of trustees. Of these societies there are only 62 remaining in existence, and their number cannot be increased. The second and third classes exceed 2000 in number.

The early societies were all "terminating,"--consisting of a limited number of members, and coming to an end as soon as every member had received the amount agreed upon as the value of his shares. Take, as a simple typical example of the working of such a society, one the shares of which are £120 each, realizable by subscriptions of 10s. a month during 14 years. Fourteen years happens to be nearly the time in which, at 5% compound interest, a sum of money becomes doubled. Hence the present value, at the commencement of the society, of the £120 to be realized at its conclusion, or (what is the same thing) of the subscriptions of 10s. a month by which that £120 is to be raised, is £60. If such a society had issued 120 shares, the aggregate subscriptions for the first month of its existence would amount to exactly the sum required to pay one member the present value of one share. One member would accordingly receive a sum down of £60, and in order to protect the other members from loss, would execute a mortgage of his dwelling-house for ensuring the payment of the future subscription of 10s. per month until every member had in like manner obtained an advance upon his shares, or accumulated the £120 per share. As £60 is not of itself enough to buy a house, even of the most modest kind, every member desirous of using the society for its original purpose of obtaining a dwelling-house by its means would require to take more than one share. The act of 1836 limited the amount of each share to £150, and the amount of the monthly contributions on each share to £1, but did not limit the number of shares a member might hold.

The earlier formed societies (in London at least) did not usually adopt the title "Building Society"; or they added to it some further descriptive title, as "Accumulating Fund," "Savings Fund," or "Investment Association." Several are described as "Societies for obtaining freehold property," or simply as "Mutual Associations," or "Societies of Equality." The building societies in Scotland are mostly called "Property Investment," or "Economic." Although the term "Benefit Building Society" occurs in the title to the act of 1836, it was not till 1849 that it became in England the sole distinctive name of these societies; and it cannot be said to be a happy description of them, for as ordinarily constituted they undertake no building operations whatever, and merely advance money to their members to enable them to build or to buy dwelling-houses or land.

The name "Building Society," too, leaves wholly out of sight the important functions these societies fulfil as means of investment of small savings. The act of 1836 defined them as societies to enable every member to receive the amount or value of a share or shares to erect or purchase a dwelling-house, &c., but a member who did not desire to erect or purchase a dwelling-house might still receive out of the funds of the society the amount or value of his shares, improved by the payments of interest made by those to whom shares had been advanced.

About 1846 an important modification of the system of these societies was introduced, by the invention of the "permanent" plan, which was adopted by a great number of the societies established after that date. It was seen that these societies really consist of two classes of members; that those who do not care to have, or have not yet received, an advance upon mortgage security are mere investors, and that it matters little when they commence investing, or to what amount; while those to whom advances have been made are really debtors to the society, and arrangements for enabling them to pay off their debt in various terms of years, according to their convenience, would be of advantage both to themselves and the society. By permitting members to enter at any time without back-payment, and by granting advances for any term of years agreed upon, a continuous inflow of funds, and a continuous means of profitable investment of them, would be secured. The interest of each member in the society would terminate when his share was realized, or his advance paid off, but the society would continue with the accruing subscriptions of other members employed in making other advances.

Under this system building societies largely increased and developed. The royal commissioners who inquired into the subject in 1872 estimated the total assets of the societies in 1870 at 17 millions, and their annual income at 11 millions. The more complete returns, afterwards obtained, indicate that this was an under-estimate.

A variety of the terminating class of societies met at one time with considerable favour under the name of "Starr Bowkett" or "mutual" societies, of which more than a thousand were established. They differed from the typical society above described, in the contribution of a member who had not received an advance being much smaller, while the amount of the advance was much larger, and it was made without any calculation of interest. Thus a society issued, say, 500 shares, on which the contributions were to be 1s. 3d. per week, and, as soon as a sum of £300 accumulated allotted it by ballot to one of the shareholders, on condition that he was to repay it without interest by instalments in 10 or 12½ years, and at the same time to keep up his share-contributions. The fortunate recipient of the appropriation was at liberty to sell it, and frequently did so at a profit; but (except from fines) no profit whatever was earned by those who did not succeed in getting an appropriation, and as the number of members successful in the ballot must necessarily be small in the earlier years of the society, the others frequently became discontented and retired. These societies could not borrow money, for as they received no interest they could not pay any. The plan was afterwards modified by granting the appropriations alternately by ballot and sale, so that by the premiums paid on the sales (which are the same in effect as payments of interest on the amount actually advanced) profits might be earned for the investing members. The formation of societies of this class ceased on the passing of the act of 1894, by which balloting for advances was prohibited in societies thereafter established. A further modification of the "mutual" plan was to make all the appropriations by sale. The effect of this was to bring the mutual society back to the ordinary form; for it amounts to precisely the same thing for a man to pay 10s. a month on a loan of £60 for 14 years, as for him to borrow a nominal sum of £84 for the same period, repayable in the same manner, but to allow £24 off the loan as a "bidding" at the sale. The only difference between the two classes of societies is that the interest which the member pays who bids for his advance depends on the amount of competition at the bidding, and is not fixed by a rule of the society.

For several years the progress of building societies in general was steady, but there were not wanting signs that their prosperity was unsubstantial. A practice of receiving deposits repayable at call had sprung up, which must lead to embarrassment where the funds are invested in loans repayable during a long term of years. It was surmised, if not actually known, that many societies had large amounts of property on their hands, which had been reduced into possession in consequence of the default of borrowers in paying their instalments. A practice had also grown up of establishing mushroom societies, which did little more than pay fees to the promoters. The vicious system of trafficking in advances that had been awarded by ballot, near akin to gambling, prevailed in many societies. These signs of weakness had been observed by the well-informed, and the disastrous failure of a large society incorporated under [v.04 p.0713] the act of 1874, the Liberator, which had in fact long ceased to do any genuine building society business, hastened the crisis.

This society had drawn funds to the amount of more than a million sterling from provident people in [Sidenote: The "Liberator."] all classes of the population and all parts of the country by specious representations, and had applied those funds not to the legitimate purpose of a building society, but to the support of other undertakings in which the same persons were concerned who were the active managers of the society. The consequence was that the whole group of concerns became insolvent (Oct. 1892), and the Liberator depositors and shareholders were defrauded of every penny of their investments. Many of them suffered great distress from the loss of their savings, and some were absolutely ruined. The result was to weaken confidence in building societies generally, and this was very marked in the rapid decline of the amount of the capital of the incorporated building societies. From its highest point (nearly 54 millions) reached in 1887, it fell to below 43 millions in 1895. On some societies, which had adopted the deposit system, a run was made, and several were unable to stand it. The Birkbeck Society was for two days besieged by an anxious crowd of depositors clamouring to withdraw their money; but luckily for that society, and for the building societies generally, a very large portion of its funds was invested in easily convertible securities, and it was enabled by that means to get sufficient assistance from the Bank of England to pay without a moment's hesitation every depositor who asked for his money. Its credit was so firmly established by this means that many persons sought to pay money in. Had this very large society succumbed, the results would have been disastrous to the whole body of building societies. As the case stood, the energetic means it adopted to save its own credit reacted in favour of the societies generally.

The Liberator disaster convinced everybody that something must be done towards avoiding such calamities in the future. The government of the day brought in a bill for that purpose, and several private members also prepared measures--most of them more stringent than the government bill. All the bills were referred to a select committee, of which Mr Herbert Gladstone was the chairman. As the result of the deliberations of the committee, the Building Societies Act of 1894 was passed. Meanwhile the Rt. Hon. W.L. Jackson (afterwards Lord Allerton), a member of the committee, moved for an address to the crown for a return of the property held in possession by building societies. This was the first time such a return had been called for, and the managers of the societies much resented it; there were no means of enforcing the return, and the consequence was that many large societies failed to make it, notwithstanding frequent applications by the registrar. The act provided that henceforth all incorporated societies should furnish returns in a prescribed form, including schedules showing respectively the mortgages for amounts exceeding £5000; the properties of which the societies had taken possession for more than twelve months through default of the mortgagors; and the mortgages which were more than twelve months in arrear of repayment subscription. The act did not come into operation till the 1st of January 1895, and the first complete return under it was not due till 1896, when it appeared that the properties in possession at the time of Mr Jackson's return must have been counted for at least seven and a half millions in the assets of the societies. In a few years after the passing of the act the societies reduced their properties in possession from 14% of the whole of the mortgages to 5%, or, in other words, reduced them to one-third of the original amount, from 7½ millions to 2½ millions. Though this operation must have been attended with some sacrifice in many societies, upon the whole the balance of profit has increased rather than diminished. Thus this provision of the act, though it greatly alarmed the managers of societies, was really a blessing in disguise. The act also gave power to the registrar, upon the application of ten members, to order an inspection of the books of a society, but it did not confer upon individual members the right to inspect the books, which would have been more effective. It empowered the registrar, upon the application of one-fifth of the members, to order an inspection upon oath into the affairs of a society, or to investigate its affairs with a view to dissolution, and even in certain cases to proceed without an application from members. It gave him ample powers to deal with a society which upon such investigation proved to be insolvent, and these were exercised so as to procure the cheap and speedy dissolution of such societies. It also prohibited the future establishment of societies making advances by ballot, or dependent on any chance or lot, and provided an easy method by which existing societies could discontinue the practice of balloting. This method has been adopted in a few instances only. The act, or the circumstances which led to it, has greatly diminished the number of new societies applying for registry.

The statistics of building societies belonging to all the three classes mentioned show that there were on the 31st of December 1904, 2118 societies in existence in the United Kingdom. Of these, 2075, having 609,785 members, made returns. Their gross receipts for the financial year were £38,729,009, and the amount advanced on mortgage during the year was £9,589,864. The capital belonging to their members was £39,408,430, and the undivided balance of profit £4,004,547. Their liabilities to depositors and other creditors were £24,838,290. To meet this they had mortgages on which £53,196,112 was due, but of this £2,443,255 was on properties which had been in possession more than a year, and £222,444 on mortgages which had fallen into arrear more than a year. Their other assets were £14,952,485, and certain societies showed a deficit balance which in the aggregate was £102,670. As compared with 1895, when first returns were obtained from unincorporated societies, these figures show an increase in income of 30%, in assets of 23%, and in profit balances of 46%, and a diminution of the properties in possession and mortgages in arrear of 14% in the nine years. The total assets and income are more than three times the amount of the conjectural estimate made for 1870 by the royal commission. It is not too much to say that a quarter of a million persons have been enabled by means of building societies to become the proprietors of their own homes.

In recent years, several rivals to building societies have sprung up. Friendly societies have largely taken to investing their surplus funds in loans to members on the building society principle. Industrial and provident land and building societies have been formed. The legislature has authorized local authorities to lend money to the working classes to enable them to buy their dwelling-houses. Bond and investment companies have been formed under the Companies Acts, and are under no restriction as to balloting for appropriation. All these have not yet had any perceptible effect in checking the growth of the building society movement, and it is not thought that they will permanently do so.

_British Colonies._--In several of the British colonies, legislation similar to that of the mother country has been adopted. In Victoria, Australia, a crisis occurred, in which many building societies suffered severely. In the other Australian colonies the building society movement has made progress, but not to a very large extent. In the Dominion of Canada these societies are sometimes called "loan companies" and are not restricted in their investments to loans on real estates, but about 90% of their advances are on that security. At the close of the year 1904 their liabilities to stockholders exceeded £13,000,000, and to the public £21,000,000. The uncalled capital was £5,000,000. The balance of current loans was £28,000,000, and the property owned by the societies exceeded £7,000,000.

_Belgium, &c._--In Belgium, the Government Savings Bank has power to make advances of money to societies of credit or of construction to enable their members to become owners of dwelling-houses. The advance is made to the society at 3 or sometimes at 2½% interest, and the borrower pays 4%. In the great majority of cases the borrower effects an insurance with the savings bank so that his repayments terminate at his death. On the 31st of December 1903 nearly 25,000 advances were in course of repayment. In Germany, building societies are recognized as a form of societies for self-help, but are not many in number, being overshadowed by the great organization of credit societies founded by Schulze-Delitzsch. In other countries there has been no special legislation for building societies similar to that of the United Kingdom, and though societies with the same special object probably exist, separate information with regard to them is not available.

(E. W. B.)

_United States._--"Building and loan association" is a general term applied in the United States to such institutions as mutual loan associations, homestead aid associations, savings fund and loan associations, co-operative banks, co-operative savings and loan associations, &c. They are private corporations, for the accumulation of savings, and for the loaning of money to build homes. The first association of this kind in the United States of which there is any record was organized at Frankford, a suburb [v.04 p.0714] of Philadelphia, on the 3rd of January 1831, under the title of the Oxford Provident Building Association. Their permanent inception took place between 1840 and 1850. The receipts or capital of the building and loan association consists of periodical payments by the members, interest and premiums paid by borrowing members or others, fixed periodical instalments by borrowing members, fines for failures to pay such fixed instalments, forfeitures, fees for transferring stock, entrance fees, and any other revenues or payments,--all of which go into the common treasury. When the instalment payments and profits of all kinds equal the face value of all the shares issued, the assets, over and above expenses and losses, are apportioned among members, and this apportionment cancels the borrower's debt, while the non-borrower is given the amount of his stock. A man who wishes to borrow, let us say, $1000 for the erection of a house ordinarily takes five shares in an association, each of which, when he has paid all the successive instalments on it, will be worth $200, and he must offer suitable security for his loan, usually the lot on which he is to build. The money is not lent to him at regular rates of interest, as in the case of a savings bank or other financial institution, but is put up at auction usually in open meeting at the time of the payment of dues, and is awarded to the member bidding the highest premium. To secure the $1000 borrowed, the member gives the association a mortgage on his property and pledges his five shares of stock. Some associations, when the demand for money from the shareholders does not exhaust the surplus, lend their funds to persons not shareholders, upon such terms and conditions as may be approved by their directors. Herein lies a danger, for such loans are sometimes made in a speculative way, or on insufficient land value. Some associations make stock loans, or loans on the shares held by a stockholder without real estate security; these vary in different associations, some applying the same rules as to real estate loans. To cancel his debt the stockholder is constantly paying his monthly or semi-monthly dues, until such time as these payments, plus the accumulation of profits through compound interest, mature the shares at $200 each, when he surrenders his shares, and the debt upon his property is cancelled.

Every member of a building and loan association must be a stockholder, and the amount of interest which a member has in a [Sidenote: Shares.] building and loan association is indicated by the number of shares he holds, the age of the shares, and their maturing value. The difference between a stockholder in such an association and one in an ordinary corporation for usual business purposes lies in the fact that in the latter the member or stockholder buys his stock and pays for it at once, and as a rule is not called upon for further payment; all profits on such stocks are received through dividends, the value of shares depending upon the successful operation of the business. In the former the stockholder or member pays a stipulated minimum sum, say $1, when he takes his membership and buys a share of stock. He continues to pay a like sum each month until the aggregate of sums paid, increased by the profits and all other sources of income, amounts to the maturing value of the stock, usually $200, when the stockholder is entitled to the full maturing value of the share and surrenders the same. Shares are usually issued in series. When a second series is issued the issue of the stock of the first series ceases. Profits are distributed and losses apportioned before a new series can be issued. The term during which a series is open for subscription differs, but it usually extends over three or six months, and sometimes a year. Some associations, usually known as perpetual associations, issue a new series of stock without regard to the time of maturity of previous issues. It is the practice in such associations to issue a new series of stock every year. Instead of shares that are paid in instalments, some associations issue prepaid shares and paid-up shares. _Prepaid shares_, known also as partly paid-up shares, are issued at a fixed price per share in advance. They usually participate as fully in the profits as the regular instalment shares, and when the amount originally paid for such shares, together with the dividends accrued thereon, reaches the maturing or par value, they are disposed of in the same manner as regular instalment shares. Some associations, instead of crediting all the profits made on this class of shares, allow a fixed rate of interest on the amount paid therefor at each dividend period, which is paid in cash to the holder thereof. This interest is then deducted from the profits to which the shares are entitled, and the remainder is credited to the shares until such unpaid portion of the profits, added to the amount originally paid, equals the maturing or par value. _Paid-up shares_ are issued upon the payment of the full maturity or par value, when a certificate of paid-up stock is issued, the owners being entitled to receive in cash the amount of all dividends declared thereon, subject to such conditions or limitations as may be agreed upon. These shares sometimes participate as fully in the profits as the regular instalment shares, but in most cases a fixed rate of interest only is allowed, the holders of the shares usually assigning to the association all right to profits above that amount. Certificates of matured shares are also issued to holders of regular instalment shares, who prefer to leave their money with the association as an investment.

Prior to the maturing of a share it has two values, the holding or book value and the withdrawal value. The book value is ascertained by adding all the dues that have been paid to the profits that have accrued; that is to say, it is the actual value of a share at any particular time. The withdrawal value is that amount of the book value which the association is willing to pay to a shareholder who desires to sever his connexion with the association before his share is matured. Some associations do not permit their members to withdraw prior to the maturing of their shares. Then the only way a shareholder can realize upon his shares is by selling them to some other person at whatever price he can obtain. There are twelve or more plans for the withdrawal of funds. Every association has full regulations on all such matters.

The purchase of a share binds the shareholder to the necessity of keeping up his dues, and thus secures to him not only the benefits [Sidenote: Variations in methods.] of a savings bank, but the benefit of constantly accruing compound interest. This accomplishes the first feature of the motive of a building and loan association. The second is accomplished by enabling a man to borrow money for building purposes. It is a moot question whether this method of obtaining money for the building of homes is more or less economical than that of obtaining it from the ordinary savings banks or from other sources. Sometimes the premium which must be paid to secure a loan increases the regular interest to such an amount as to make the building and loan method more expensive than the ordinary method of borrowing money, but a building and loan association has a moral influence upon its members, in that it encourages a regular payment of instalments. Some associations have a fixed or established premium rate, and under such circumstances loans are awarded to the members in the order of their applications or by lot. The premium may consist of the amount which the borrower pays in excess of the legal interest, or it may consist of a certain number of payments of dues or of interest to be made in advance. There are very many plans for the payment of premiums, nearly seventy relating to real estate loans being in vogue in different associations in different parts of the United States; but in nearly all cases the borrower makes his regular payments of dues and interest until the shares pledged have reached maturing value. There is also a great variety of plans for the distribution of profits, something like twenty-five such plans being in existence. The methods of calculating interest and profits are somewhat complicated, but they are all found in the books to which reference will be made. The various plans for the payment of premiums, distribution of profits, and withdrawals, and the calculations under each, are given in full in the ninth annual report of the U.S. commissioner of labour.

Most building and loan associations confine their operations to a small community, usually to the county in which they are situated; but some of them operate on a large scale, extending their business enterprises even beyond the borders of their own state. These national associations are ready to make loans on property anywhere, and sell their shares to any person without reference to his residence. In local associations the total amount of dues paid in by the shareholders forms the basis for the distribution of profits, while in most national associations only a portion of the dues paid in by the shareholders is considered in the distribution. For instance, in a national association the dues are generally 60 cents a share per month, out of which either 8 or 10 cents are carried to an expense fund, the remainder being credited on the loan fund. The expense fund thus created is lost to the shareholders, except in the case of a few associations which carry the unexpended balances to the profit and loss account, and whatever profits are made are apportioned on the amount of dues credited to the loan fund only. The creation of an expense fund in the nationals has sometimes been the source of disaster. Safety or security in both local and national associations depends principally upon the integrity with which their affairs are conducted, and not so much upon the form of organization or the method of distribution. Some of the states--New York, Massachusetts, New Jersey, Ohio, Illinois, California and others--bring building and loan associations under the same general supervision of law thrown around savings banks. In some states nothing is officially known of them beyond the formalities of their incorporation. Though the business of the associations is conducted by men not trained as bankers, it yet meets with rare success. Associations disband when not successful, but when they disband great loss does not occur because the whole business of the association consists of its loans, and these loans are to its own shareholders, as a rule, who hold the securities in their associated forms. The amount of money on hand is always small, because it is sold or lent as fast as paid in. A disbanded association, therefore, simply returns to its own members their own property, and but few real losses occur. Investment in a building and loan association is as nearly absolutely [v.04 p.0715] safe as it can be, for the monthly dues and the accumulated profits, which give the actual capital of the association, are lent or sold, as it is termed, by the association as fast as they accumulate, and upon real estate or upon the stock of the association itself. The opportunities for embezzlement, therefore, or for shrinkage of securities, are reduced to the minimum, and an almost absolute safety of the investment is secured.

The growth of these associations has been very rapid since 1840, and at the opening of the 20th century they numbered nearly 6000. The Federal government, through the department of labour, made an investigation of building and loan associations, and published its report in 1893. The total dues paid in on instalment shares amounted then to $450,667,594. The business represented by this great sum, conducted quietly, with little or no advertising, and without the experienced banker in charge, shows that the common people, in their own ways, are quite competent to take care of their savings, especially when it was shown that but thirty-five of the associations then in existence met with a net loss at the end of their latest fiscal year, and that this loss amounted to only a little over $23,000. Bulletin No. 10 (May 1897) of the U.S. department of labour contained a calculation of the business at that date, based upon such states' reports as were available. That calculation showed a growth in almost every item. During the years of depression ending with 1899 the growth of building and loan associations was naturally slower than in prosperous periods.

See _Ninth Annual Report of U.S.A. Commissioner of Labour_ (1893); _Bulletin_, No. 10 (May 1897), of the Department of Labour; Edmund Rigley, _How to manage Building Associations_ (1873); Seymour Dexter, _A Treatise on Co-operation Savings and Loan Associations_ (New York, 1891); Charles N. Thompson, _A Treatise on Building Associations_ (Chicago, 1892).

(C. D. W.)

BUILTH, or BUILTH WELLS, a market town of Brecknockshire, Wales. Pop. of urban district (1901), 1805. It has a station on the Cambrian line between Moat Lane and Brecon, and two others (high and low levels) at Builth Road about 1¾ m. distant where the London & North-Western and the Cambrian cross one another. It is pleasantly situated in the upper valley of the Wye, in a bend of the river on its right bank below the confluence of its tributary the Irfon. During the summer it is a place of considerable resort for the sake of its waters--saline, chalybeate and sulphur--and it possesses the usual accessories of pump-rooms, baths and a recreation ground. The scenery of the Wye valley, including a succession of rapids just above the town, also attracts many tourists. The town is an important agricultural centre, its fairs for sheep and ponies in particular being well attended.