A Starr-Bowkett Society is a co-operative, non-profit financial institution

Financial institution

In financial economics, a financial institution is an institution that provides financial services for its clients or members. Probably the most important financial service provided by financial institutions is acting as financial intermediaries...

 that provides interest-free loans to its members and operates on the principle of mutual self-help

Self-help

Self-help, or self-improvement, is a self-guided improvement—economically, intellectually, or emotionally—often with a substantial psychological basis. There are many different self-help movements and each has its own focus, techniques, associated beliefs, proponents and in some cases, leaders...

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

Australia

Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...

 from the late 19th century through the early and mid 20th century, and possibly an inspiration for modern micro-credit

Microcredit

Microcredit is the extension of very small loans to those in poverty designed to spur entrepreneurship. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit...

 movements, they are all but non-existent today.

Origins

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

United Kingdom

The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

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

Middle class

The middle class is any class of people in the middle of a societal hierarchy. In Weberian socio-economic terms, the middle class is the broad group of people in contemporary society who fall socio-economically between the working class and upper class....

 there to afford their own homes.

How a Starr-Bowkett Society Works

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.

Starr-Bowkett Societies Today

Some societies have transformed over the years into mainstream banks (e.g. Newcastle Permanent

Newcastle Permanent Building Society

The Newcastle Permanent Building Society is a building society based in Newcastle, New South Wales in Australia. It has total assets of $6.3 billion, the largest of any building society in Australia.- History :...

 of Newcastle, NSW

Newcastle, New South Wales

The Newcastle metropolitan area is the second most populated area in the Australian state of New South Wales and includes most of the Newcastle and Lake Macquarie Local Government Areas...

, Australia) , and many closed in the 1960s due to unscrupulous operators. At least one traditional Starr-Bowkett society exists in Newtown, NSW

Newtown, New South Wales

Newtown, a suburb of Sydney's inner west is located approximately four kilometres south-west of the Sydney central business district, straddling the local government areas of the City of Sydney and Marrickville Council in the state of New South Wales, Australia....

, Australia, but is no longer taking on new members and only remains to pay out the existing pool