Starr-Bowkett Society

A Starr-Bowkett Society was a co-operative, non-profit financial institution that provides interest-free loans to its members and operates on the principle of mutual self-help as espoused by Dr T. E. Bowkett in 1843. Popular in Australia from the late 19th century through the early and mid 20th century, and possibly an inspiration for modern micro-credit movements, they are no longer existent today.

Dr. Thomas Edward Bowkett was a London surgeon as well as 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.

Concerns over the "lottery" system used, as well as the actions of unscrupulous 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 there to afford their own homes.

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 afterward. Loan recipients are chosen by random lottery. Once a member has received a loan, they then pay back that loan and 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.

Some societies have transformed over the years into mainstream banks (e.g. Newcastle Permanent of Newcastle, NSW, Australia), 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.

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