A Starr-Bowkett Society was a co-operative, non-profit

financial institution A financial institution, sometimes called a banking institution, is a business entity that provides service as an intermediary for different types of financial monetary transactions. Broadly speaking, there are three major types of financial ins ...

that provided interest-free loans to its members and operated on the principle of mutual

self-help Self-help or self-improvement is "a focus on self-guided, in contrast to professionally guided, efforts to cope with life problems" —economically, physically, intellectually, or emotionally—often with a substantial psychological basis. When ...

, as espoused in 1843 by Dr T. E. Bowkett. Popular in

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from the late 19th century until the early to mid 20th century, they no longer exist in any form.

Origins

Dr. Thomas Edward Bowkett was a London surgeon, and a vocal proponent of a number of progressive and unionist ideas. His scheme to provide "mechanics" with a means to become landholders, and thus have a greater influence on government, was first proposed during a series of lectures and articles in 1843. In 1862 Richard B. Starr made some changes to Dr. Bowkett's scheme, including a slightly increased subscription fee and shorter subscription time, among others. The changes made the scheme more palatable to potential subscribers and Starr promoted his now copyrighted system aggressively. The Starr changes also made running a Starr-Bowkett Society profitable for management.

Logistics of loans

A registered society is formed with a limited number of memberships available. New members are assigned a number and select the amount of loan they wish to apply for. Members then pay a monthly subscription for a set time period - e.g. 200 months. The amount paid each month is based on the amount of the proposed loan, generally 0.25% of the loan. Once the society has accumulated sufficient funds from subscriptions, ballot meetings are begun and held on a monthly basis. Loan recipients are chosen by a lottery. Once a member has received a loan, they pay it back, along with any amount still owing on their original subscription commitment. Once all members have had the opportunity to take out a loan, the society is closed and the original capital returned to its members.

History

There were concerns over the lottery system involved in the scheme, which was carried out in full view of all members and therefore open to physical abuse to change those who received the funds. That, and the actions of some unscrupulous society managers, led governments in the

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to outlaw Starr-Bowkett societies there. However, they had spread to the Australian colonies, and became a popular option for a burgeoning

middle class The middle class refers to a class of people in the middle of a social hierarchy, often defined by occupation, income, education, or social status. The term has historically been associated with modernity, capitalism and political debate. C ...

to afford their own homes.Darnell, Maxine. The Alternative Building Society - Starr-Bowkett Societies: function, growth and operation. Presented at Asia Pacific Economic and Business History Conference, Sydney, 12–14 February 2007 Some societies transformed over the years into mainstream banks (e.g. Newcastle Permanent of

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, Australia),"History of Newcastle Permanent
/ref> and many were closed in the 1960s due to unscrupulous operators. The last known traditional Starr-Bowkett society, in Newtown, NSW, Australia, sold its building in 2014 and moved operations to Strathfield. Its remaining schemes will continue to operate until the final loans are repaid. As of 1 July 2019, no new Starr-Bowkett Societies may be formed or registered. Existing societies may continue to operate, however, Starr-Bowkett Societies cannot admit any new members.

References

{{Reflist Mutual organizations