The Southern Cross PUBLISHED WEEKLY. Invercargill, Saturday, May 23. Starr-Bowkett Society.

Southern Cross, Volume 4, Issue 8, 23 May 1896, Page 8

The Southern Cross PUBLISHED WEEKLY. Invercargill, Saturday, May 23. Starr-Bowkett Society.

In view of the interest taken just now in building societies worked on what is known as the Starr-Bowkett system it will not be out ot place to explain briefly the principles on which they operate. To make the subject clear we will take the following example, which embraces the whole system : —A person is unable to provide a home for himself. A number of people combine and agree to pay so much per week for a given number of years. When a certain amount is subscribed a ballot is taken to decide who shall receive the first instalment, as it is a moral certainty that only one member at a time’ can get the amount agreed upon. With a view of meeting the case of a member who may require the money sooner than he would get it if he took his chance by ballot, an opportunity is given him to secure it by putting each alternate amount to be disposed of up to,tender. The sum that is usually given costs the buyer two or three per cent. This premium is capitalised, and the amount advanced is repaid by equal weekly instalments extending over a period of so many years. The borrower, whether by ballot or sale, must of course provide good security in freehold or leasehold property, as is required for an ordinary mortgage. As all the subscribers are not borrowers, at any rate simultaneously, it is only fair that a man who requires the amount early should pay a little for the advantage of being able either to pay off an existing mortgage for which-a higher rate of interest is being paid, or to purchase a property and save himself a considerable amount in rent. As a member he gains an advantage over the others and it is only right that he should pay in something to the funds, so as to give the investing shareholders a return for their subscriptions while waiting their turn for a free loan. From this sketch it will be seen that the Starr-Bowkett is a purely mutual Society. The title of a branch lately formed in Dunedin is “ Mutual Aid,” a very appropriate name. The rules are elaborated and worked out in detail, but each rule is based on liberal lines, for the simple reason that it is the shareholders' own money that is dealt with, and each shareholder has an equal right. It is proposed to form a Society in Invercargill, at a meeting to be held next Friday, and it is intended to carry it out on similar lines to the Dunedin one, the rules being adjusted to suit. It is intended that 1000 shares be offered, to pay Is per week each, for 15 years. That would be equal to £2,600 per annum, The holder of each share is entitled to a ballot of £IOO, but no person can hold more than five shares. As the' shares are placed in clusters of five, the holder of that cluster is enabled to get £SOO free ot interest at a small premium should he purchase. The amount of loan is repayable at the rate of £8 per £IOO over a period of 12f years ; but should the shareholder wish to cease his subscription of Is per week he may do so at the end of five years, and the amount that he has paid in —£l3 per share —is credited to the final payment of his advances, thereby reducing his time-payment to 11 years. But in this case the shareholder does not participate in any profit at the termination of the Society. Should a subscriber wish to withdraw he may do so after three years—provided he has not received

an appropriation and have the amount of his subscriptions refunded. The drawer of a free advance can sell the same and transfer his,shares to: the purchaser, the premium belong--ing to the seller, who ceases to be a member. But should that member—not perhaps requiring money at the time—only wish to sell his right to the ballot, he may sell it through the Society, who would charge b commission on the sale, and the balance would be paid to him, together with a transfer of the buyer’s unappropriated shares. For instance: —£100 is sold for £ll6. Commission on

same at 5 per cent., £5 15s; and transfer fee £1 —total, £6 15s, which, taken from the amount realised, leaves a profit of £8 15s to the seller, with the right to a further ballot, which may occur several times during the currency of the Society’s terrd. Five shares on this basis will yield £43 15s, although the seller may‘only have paid in a nominal sum in subscriptions. This should form a very good investment for minors and others unable to give security for an advance. Another feature is the advantage gained by a working man holding even only one share. He is bound during the currency of the Society to obtain a free loan, which would enable him to buy a house at a cost of 3s Id per week. This in itself is a very small rent, and at the same time the principal is being repaid. Again, shareholders can borrow up to three-fourths of the amount of their subscriptions at a small rate of interest. Provision is made for suspending payments. Should a member, through sickness, lack of work, or other sufficient cause, be unable to keep up his payments, they can be suspended for six months, free of any fine, but must be paid up during the following year. In the case of advances, repayments may be suspended for a year, but the borrower must pay 10 per cent, on such arrears, which would equal 16s per annum per share.