Shares may be held only by duly admitted members and. each entitles the holder to one vote. These are of various kinds. The most common are instalment shares, on which the subscriber makes payments at stated intervals, and investment shares, for which payment may be made in whole or in pan at subscription.
A permanent association may issue shares at any time. A serial may issue shares only in series, and no new shares may be issued in a series after a dividend has been declared, except to subscribers who pay the book value of such shares. Instalment shares are used for loan transactions. A borrower is required to subscribe to instalment shares in an amount equal to his loan. Consequently he becomes liable to twice the amount of his loan for any i losses of the association. A first mortgage is given on the house and lot for which the loan was made, and the shares are pledged as an ad ditional security. Non-borrowing members may subscribe for as few or as many shares of any kind as they please. Payments made by members serve to mature the shares. Each share is credited with its proper portion of the profits. At maturity the shares are can celed. If a member is not indebted to the as sociation, he is given their face value in cash. If he is a borrower, this value offsets his debt and his loan becomes paid and his mortgage is canceled, along with his pledged shares. Pledged shares may not be withdrawn until the loan has been fully paid. But the credits on other shares ordinarily may be withdrawn on 60 days' notice.
By reason of this method the loans of a building and loan association are repayable in instalments on the sinking-fund plan, and may ma for 10 or even to 18 years. The funds that an association may have for investment are auctioned off to the highest bidder at a regular meeting or at some meeting specially called for the purpose. The sum which the successful bidder pays in addition to the inter est rate is called the premium. The law pre
scribes no limit for this, while entrance fees and fines for withdrawals or defaults may be charged. Hence, the borrower may be re quired to pay what would be usury in the case of any other institution or lender. In the United States, there are at least 68 premium plans, 25 plans for distributing profits, 12 withdrawal plans and 7 kinds of shares. So many changes have been made in their original scope that the building and loan associations, under the laws in a number of the States„are no longer true to type. This has been brought about by removing restrictions as to area, making shareholding a mere nominal require-. ment for borrowers and depositors, and per mitting the associations to borrow money, issue bonds, incur liabilities with persons not members, and to finance themselves with funds coming from outside sources.
Bibliography.— Brutrnecic, W. von, 'Die Pfandbriefsysteme der preussischen Land schaften> (Berlin 1910) ; Casasus, Joaquin D., 'Les institutions de credit; etude sur leurs fonctions et leur organization) (Brussels 1900); Franz, Robert, 'Die Landschaftleihen Kredit institute in Preussen) (Berlin 1902) ; Gortz, Dr. V., 'Die Verfassung und Verwaltung der Schlesischen Landschaft) (Breslau 1907) ; Herrick and Ingalls, 'Rural Credits) (New York 1914), and 'How to Finance the Farmer) (Ohio
Josseau, J. B., (Traite du Credit Fonaer) (Paris 1873) ; Nicholson, Sir F. A., 'Report on Land and Agricultural Credit to the Madras Presidency) (2 vols., Madras 1895) ; 'Oppenried, R. M. von, 'Die Hypothekaranstalten in Deutschland und
(Vienna 1911); Spitzet, S.,