Starr-Bowkett Society

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The last known Starr-Bowkett Society, in Newtown, Australia, closed in 2014 Starrbowkett.JPG
The last known Starr-Bowkett Society, in Newtown, Australia, closed in 2014

A Starr-Bowkett Society was a co-operative, non-profit financial institution that provided interest-free loans to its members and operated on the principle of mutual self-help, as espoused in 1843 by Dr T. E. Bowkett. [1] Popular in Australia from the late 19th century until the early to mid 20th century, they no longer exist in any form.

Contents

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 United Kingdom to outlaw Starr-Bowkett societies there. However, they had spread to the Australian colonies, and became a popular option for a burgeoning middle class to afford their own homes. [2]

Some societies transformed over the years into mainstream banks (e.g. Newcastle Permanent of Newcastle, NSW, Australia), [3] 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 [4] and moved operations to Strathfield. Its remaining schemes will continue to operate until the final loans are repaid. [5]

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. [6]

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References

  1. Darnell, Maxine. Attaining the Australian Dream: The Starr-Bowkett Way
  2. 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
  3. "History of Newcastle Permanent
  4. Statement of Heritage Impact - DA201500082 - 43 Enmore Road Newtown (pdf file). Retrieved from the Marrickville Council website
  5. "Register of unlicensed carried over instrument lenders".
  6. Trading, NSW Fair (2020-09-03). "Co-operative housing and Starr-Bowkett societies". NSW Fair Trading. Retrieved 2022-09-15.