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the constantly necessary repairs, does not realise much more than five per cent. upon the money which the house cost him. But let us sup. pose that he does; let us suppose that, after paying all the claims upon him, he does realise ten per cent. upon his original outlay. Will he, when he sells that house to us, part with it for much less than the sum necessary to produce the same profit which he would obtain if he leased it to us? Most assuredly he would not; wherefore it is hard to see how the first and second parts of the statement, which we have quoted, tally with each other. The truth is, that the rent of a house depends as much upon its situation as upon its size. In a good situation we should pay a high rent, but we should regard that rent as a return for the advantages of the situation, and we could not buy a house in that situation without paying an equally high price. In a less favourable situation, we should not be called upon to pay a higher rent, all things considered, than a fair rate of interest upon the value of the house ; because, in a situation where houses were not in great demand, the rent of all the houses must very soon reach the lowest possible level. We are willing, however, to admit that these observations upon the buying, will not apply with equal force to the building of houses, though we might reasonably use nearly the same arguments in considering that branch of the subject. But we will pass on to the general construction of the Company, and point out what we conceive to be its ehiel defects. The capital of the Company is stated at £120,000, in ce thousand shares. But this capital is to be raised by annual payments of six guineas per share—that is, by the accumulation of a net annual income of £6,300. And the dealings of the Company are to be 50 favoured by fortune, as to make this annual income amount, in ten years (or probably much less), to £120,000, that is, to nearly double the net amount paid in that time. Now, a constantly-accruing annual capital of £6,300 will not, even at ten per cent. compound interest, produce£120,000, in this given time. Supposing the Company to be worked free of expense, and its capital to be regularly invested at about 12 per cent. compound interest, the stated result might, doubtless, be obtained. But from whom is this interest to be obtained ? Not in the regular way of trade, most certainly, but from the members of the Society, who are to borrow their own money at this rate of interest, in order to buy, build, or improve houses. But as few people would care to borrow money at 80 high a rate of interest, the case is put differently, so as to show that the highest possible advantages may be acquired by the payment of the smallest possible sum ; a proposition which all companies endeavour, though all fail, to prove. Thus, if we subscribe to this Society, we are bound to pay six guineas annually, in return for which, at the end of ten years, we are to receive £120. But if we wish to receive that sum in the first year, the Society will give it to us, minus a discount proportioned to the advancement of the money before it is due. It, therefore, offers us not more than £70 in the first year ; but as it is clear that all the members cannot borrow this sum, it puts the loans up to auction, and sells them to those who will buy them at the greatest possible premium. Thus, if any member agrees to take £60 or £50 in the first year, in lieu of his promised £120, he will be preferred to us who wish to have £70. Now this we hold to be the worst feature
of the Society, because it is holding out an inducement to borrow money at an usurious rate of interest. It must now be clear, that all the advantages which the “ lending members” derive, are a corresponding loss to the “borrowing members,'' and that the nearer the former are to the receipt of their £120, the further are the latter from the possession of the same sum. Now, in return for this money, which we borrow in the first year, we have to pay an annual six gui. neas, an interest of one per cent. on the gross amount of £120, and an interest of two per cent. on the net amount of the loan. Supposing that we borrowed £70 in the first year, we should have to pay £8 18s. per annum for ten years. Let the arithmetical reader calculate this, and allow five per cent. compound interest on the part of the Company, and he will find both how much we pay for our £70, and how far it is from yielding £120 to the Society. If we borrow money in the second year, we must of course have a higher loan, because we are nearer to the receipt of our £120; and this loan must increase in each succeeding year. The Society puts this yearly increase at £5 per annum ; so that, if the first year's loan were £70, the loan of the second year would be £75, and the loan of the third year £80. Of course, the Society would every year put out to interest the balance which it possessed, after making its loan, but we do not think it could easily or safely obtain more than five per cent. interest for this money. Of course, those members who borrow will have nothing to receive at the end of the ten years, so that if many borrow, there will be few to receive, and vice versâ. We first made a calculation of the Company's resources, supposing that they lent to eighty-four members every year, and the result proved that they would be in debt to the amount of £20,000. Thinking that this might arise from lending money to too many members, we made a fresh calculation, which we now submit to our readers. And we begin by remarking that we only put the first year's loan at
£60 instead of £70 per share, whereby we give a great advantage to · the Society ; in spite of which advantage, the result is debt.
Balance in hand . . . .
Fifth year's income.
Balance in hand .
Sixth year's income
Balance in hand. .
340 288 1,678
Seventh year's income
Balance in hand .
32,284 Eighth year's subscription Two per cent. on 1st, 2nd, 3rd, 4th, 5th, 6th, and 7th loans 420 One per cent. on 280 sums of £120 each
336 Five per cent. on balance and subscription.
1,929 Eighth year's income . . . . 41,269
Fresh loan of £95 on 40 shares . . £3,800
Balance in hand. . . . . 37,469 Ninth year's subscription :
6,300 Two per cent. on 1st, 2nd, 3rd, 4th, 5th, 6th, 7th, and 8th loans.
496 One per cent. on 320 sums of £120 each . .
384 Five per cent. on balance and subscription :
Ninth year's income.
Balance in hand
and 9th loans .
By this calculation the Society has now lent money upon three hundred and sixty out of one thousand shares. It should now, according to its promise, make an allotment of £120 per share to the holders of six hundred and forty shares. But this would require a capital of £76,800, so that the funds of the Society, which only amount to £52,601, fall £24,199 short of the amount required. Now, let our readers remember, that we have based our calculations upon the premises put forward by the Society. Let them, also, remember that any further advantage to the lending members must come out of the pocket of the borrowing members. We would call attention to the amount of loan which the borrower receives in the ninth year. It is only £100; whereas if he waited until the tenth year, he would receive, or rather would be entitled to receive, £120. This fact will be a sufficient answer to those who shall think that we have not given the lending members their fair advantage. Another feature we would notice is this, that the Society has made no allowance whatever for working the scheme. We do not exaggerate when we say that, three trustees, a committee of management, a secretary, and the official expenses, would carry off, at least, five per cent. upon the annual income. The lawyer and the surveyor must also be paid, but their fees would, of course, come out of the borrower's pocket, which would greatly increase the rate of interest at which he borrowed his money. In conclusion, we would observe, that the calculations which we have made have not as yet prejudiced us against building societies in general. We shall resume the subject at a future time ; but at present we must content ourselves with recommending government officers to avoid the Society whose prospectus we have criticised. We recommend them not to be “ lending members,” lest they should not reap the promised and ex pected profit; and not to be “ borrowing members,” lest they should be compelled to pay more than the value of the property, which will,
being of course mortgaged to the Society, put them completely in the Society's power.
NOTE.—Having attended the preliminary meeting of this Society, our opinion has been completely confirmed. In our next number we shall publish further particulars.
Enquiries and Correspondence.
UNDER this head we purpose inserting answers to inquiries upon interesting points of religion and philosophy, and remarks upon disputed topics that may be engaging the attention of scientific men. Our readers are invited to correspond with us on these matters, and to offer subjects that may with propriety and profit be discussed in our pages. Their letters will always receive our best consideration, and it will afford us no slight satisfaction, if, through the medium of the “ Student," any young man may be instrumental in casting light upon intricate questions, and so rendering service to the cause of truth. We need not remind those young men who may favour us with communications, box requisite an ingredient is modesty. We are sure that their views will ever be stated as learners, and not as instructors—rather as the suggestions of inquiring minds, than the dogmas of matured philosophers.
THE SCEPTICISM OF HUME.
It must be a matter of sincere rejoicing to every one who appreciates the importance of Christian truth, to observe what little influence the doctrines of Mr. Hume appear to exert on the English mind. Their power is much more acknowledged in Germany, where speculations of an abstract character are looked upon as the very basis of philosophy. The result of such an opinion is sufficiently evident. A complete barrier is at the very outset thrown upon all experimental researches: that which cannot be demonstrated by the rules of logic is looked upon as chimerical, and the powers of the human intellect, as well as the affections of the soul, are either stunted in their growth, or irretrievably destroyed. Thus it is that the warm feelings of some have caused them to acquire a kind of horror for these metaphysical subtilties, which, to a certain extent, I am inclined to think, operates beneficially. But still, to minds strongly impressed with the truth and harmony of all God's works, and feeling assured that their deepest inquiries will but more clearly develope his attributes of wisdom and love, to such it is a source of grief that there should be said to exist paths of knowledge