a Starr on the Horizon - Starr Bowkett Building Societies.
I was at a birthday party recently and as happens at parties a new acquaintance asked me about my work. After hearing about Australian Mutuals History they told me about acquiring their first home loan through Newtown & Enmore Starr-Bowkett Building Co-op Societies. The office bearing the society name is still standing (see picture below recently snapped by me).
Even among the mutual community Starr-Bowkett building societies are a bit of an unknown quantity so I thought they were due a History101. Starr-Bowkett Societies are named after Dr. Thomas Bowkett who put forth the basic idea in 1843 and Richard B. Starr who tweaked it a bit in 1862.
Economic historian Maxine Darnell describes the workings of Starr-Bowkett Societies:
Starr-Bowkett societies are a form of co-operative finance whereby members pool their savings through the payment of monthly subscriptions, the level of which depends upon the number of shares held by the member. For example, a current member would pay $48 per share at the rate of 25 cents per share per month, over 16 years, and each share held would entitle the member to an interest free loan of $100. A member holding 100 shares would contribute $25 monthly, be entitled to a loan of $100,000 when drawn in the ballot and in 16 years would pay share subscriptions of $4,800. Once the requisite numbers of members have registered (usually about 499) these pooled savings are then used to make loans, or more correctly 'appropriations', to members of the society. These loans are free of interest and are allocated on the basis of a ballot which all members of the society have an equal chance of winning, as the result of the ballot is not determined by the duration or size of membership.
The member takes no further part in the ballots once they have received an appropriation and begins to repay their loan in monthly instalments on top of their monthly subscriptions until the loan is repaid. Members keep paying their subscriptions until their shares are paid for which usually takes about 12–16 years. Once all members have repaid their loans the society is terminated under the Rules of the Society (which in turn are governed by state legislation) and members receive back the total of their subscriptions minus management charges. Any profit made by the society is also distributed amongst members according to the number of shares held. These profits are derived from the sale of appropriations at premiums, transfer fees and bank interest. All loans were, and continue to be, secured by mortgage over real property; however, the loans can be used for a myriad of purposes, which does not follow the intention of Bowkett to make freeholders of the lower classes.
Starr-Bowkett societies represent the most pure form of co-operative finance, as there is no interest paid on either the subscriptions paid (an enforced savings plan) or the loan received, no moneys are accessed outside of the society for the purpose of lending and the societies are non-profit making. The three features of non-profit making, lack of interest payments and lack of outside finance clearly distinguish the Starr-Bowkett model from the permanent co-operative and other terminating building society models.
Like other terminating building societies most have either wound up or became permanent building societies (or indeed mutual banks). However, the lottery system was something that unscrupulous operators could exploit, and they were outlawed in the United Kingdom as early as 1894.
The first Starr-Bowkett Society in Australia was the subscribing of the Numbers 1, 2 and 3 Sydney Starr-Bowkett Benefit Building Societies in 1868.
Patmore, Balnave & Marjanovic note in their new A History of Australian Co-operatives 1827-2023 that” by contrast to building societies, NSW Star-Bowkett societies were insulated from the vagaries of the financial market through self-financing and grew from 12 societies in 1900 to 108 in 1914. The growth was fuelled by a loss of confidence in building societies, the workers’ inability to obtain bank housing finance and the desire to buy their own property as rents skyrocketed in NSW prior to the First World War … Starr-Bowkett societies peaked in the mid-1920s, with several scandals affecting their reputation in NSW and their assets falling during the 1930s Depression”.
They go on to note that as of May 2023, there are only two Starr-Bowkett societies registered in NSW.
The aforementioned Newtown & Enmore Starr-Bowkett Building Co-op Societies appears in The Government Gazette of the State of New South Wales of 27 October 1995 announcing a “voluntary winding up” notice of the society.
When did it begin, I hear you ask? The [Sydney] Evening News of Tuesday 17 May 1904 records:
The inaugural meeting of Newtown & Enmore Starr-Bowkett Building Society was held on Friday last. The following were appointed first directors of the society – Dr G. Hall Bohramann, James Hunter, Robert Hollis M.L.A, John Kingsbury, John Salmon (Mayor of Newtown), with power to increase the number to eight; trustees John Salmon, James Hunter: solicitor, Tedd A. Beeby, 127 King Street, Sydney; valuers and surveyors Messrs. Fisher, Nott and Nelson: secretary, A. Hancock.
Below is the building in better days in 2012. Courtesy State Library of NSW
