House Purchase



Bournville Village Trust


The History of Advances made to the Bournville Village Trust

that assisted housing developments in the 'Garden Village'

located adjacent to Cadbury's Chocolate Factory

Early in May 1920, the Bank was informed that the Bournville Village Trust had been approached by persons desiring to buy or lease building sites and that they required funds to finance the erection of houses.


The Bournville Village Trust was founded in 1900 by the world famous chocolate-maker and philanthropist George Cadbury with a gift of 313 homes. George Cadbury and his older brother, Richard, had made a success of their father’s chocolate business, moving it from Birmingham's city centre in 1879. The area around the new ‘factory in a garden’ was named Bournville - Bourn being the name of the local stream.


In 1893, George Cadbury bought 120 acres of land close to the factory and planned, at his own expense, a model village which would ‘alleviate the evils of modern, more cramped living conditions'. Bournville was conceived as a garden village for people from a wide range of backgrounds and not just for workers of the chocolate factory. However, early in the development, George found people were buying up the beautiful arts and crafts homes to sell them on for huge profit - he therefore started building homes for rent. Known as the ‘Ten Shilling’ or ‘Sunshine Houses’, these homes were set at an affordable rent to help families on low incomes.


Representatives of the Bank interviewed the Secretary of the Trust (a Mr Barlow) and it was agreed that the Trust should make a definite proposal to the Bank. If that proposal was found acceptable, the Bank Committee would then apply to the Treasury for the necessary sanctions to enable the Bank to meet the wishes of the Trust.


Later in May, the Bank received a letter from Mr Barlow outlining an arrangement for the proposed advance; the suggested arrangement was that the Trust should lodge security with the Bank drawing against this as required and loaning the money to clients building on the Estate. When the houses were completed, the loans would then be transferred and would become a transaction between the house-owners and the Bank, the deeds of the houses being lodged as security.


Mr Barlow was unable to state the amount the Trust would wish to draw upon the Bank, but thought that it would be about £5,000. The Bank Committee agreed that an application would be made to the Treasury for permission to make this type of advance.


On June 7th, the Town Clerk reported to the Committee that the Treasury had the question of the advance under consideration.


Subsequently, a special meeting of the Bank Committee was held at the Council House on July 23rd 1920 at which the Town Clerk presented the following report:


Bournville Village Trust


I beg to report that I have applied to the Treasury for their consent to advances being made to the Bournville Village Trust by way of investment of Bank funds.


I have now received a reply the effect of which is to say that the Lords Commissioners would feel considerable hesitation in sanctioning such an investment "as it is clearly desirable that investments on behalf of the Savings Bank should be in accordance with ordinary banking practice be in liquid securities". An alternative suggestion is, however, made by the Treasury to which no doubt the Committee wish to give their consideration.


For the better explanation of the matter I beg to submit with this report copy of my letter to the Treasury dated 20th May last, together with a copy of their reply dated 9th July instant.

The Council House,


20th May 1920.



Birmingham Municipal Bank.

Investment in Securities.


I am instructed to make application to the Lords' Commissioners of HM Treasury for their consent to the investment by this Corporation under Regulation 16 of the Birmingham Municipal Bank Regulations 1919 of the funds of the Bank in certain further securities.


The first desire of the Corporation is to be at liberty to invest such portion of the bank funds as they may consider desirable in Treasury Bills.


Secondly, it is wished that the bank may be in a position to assist a well known and substantial local trust, "The Bournville Village Trust" in the erection of houses for the working classes. For this purpose, the Corporation proposes by way of investment to lend moneys to the Trust upon the security of freehold property, this security being obtained by a mortgage of land upon which houses have already been erected sufficient to cover an advance on an amount not exceeding 80% of the value of such freehold property as assessed by the Bank's valuers. The proposal is, that as from time to time the houses erected by the Trust are completed, the loans will be transferred to the occupants of such houses in order that the houses may be purchased by such occupants in conformity with the object which section 12 of the Birmingham Corporation Act 1919, was designed to attain.


I beg accordingly, respectfully to submit these proposals for the consideration of the Lords' Commissioners and to ask that they may be pleased to intimate their consent in accordance with the requirements of the regulations.


I am, Sir,

Your obedient Servant,

F H C Wiltshire.

Town Clerk.


The Secretary,

H M Treasury,

Whitehall, SW1

Treasury Chambers,


London SW1

9th July 1920




I am directed by the Lords Commissioners of His Majesty's Treasury to advert to Treasury Letter 22830/20 of the 27th May relative to the proposed investment of funds of the Birmingham Municipal Bank in loans to the Bournville Village Trust upon the security of freehold property, this security being obtained by a mortgage of land upon which houses have already been erected sufficient to cover an advance on an amount not exceeding 80% of the value of such freehold property as assessed by the Bank's valuers.


This proposal seems to their Lordships to raise questions of considerable difficulty. It would not appear to be possible for the Housing Department of the Bank to make direct advances to the Bournville Village Trust under Section 12 (1) of the Act unless the Trust become depositors in the Bank and then only for the purchase or acquisition of houses already built, not for the building of houses, and, apart from the legal question, My Lords would feel considerable hesitation such an investment under Regulation 16, as it is clearly desirable that investments on behalf of the Savings Bank should be in accordance with ordinary banking practice, be in liquid securities.


The wishes of the Corporation might however be met, as it seems to Their Lordships, in the following way:


(1) The Savings Bank to lend sums required by the Bournville Village Trust to the Corporation "at call", a use of the money specifically sanction by Regulation 16.


(2) The Corporation to make advances, out of moneys so borrowed, to the Bournville Village Trust under the general provisions of Section 7 of the Act.


(3) When and as, houses are built, the Bournville Village Trust and the intending purchaser (being a depositor in the Bank) to arrange with the Corporation (a) for an advance from the Housing Department of the Savings Bank of the amount necessary to purchase. This sum the purchaser would cause to be paid to the Bournville Trust (the seller) who would (b) repay to the Corporation, pro tante, the advances made to them under Section 7, the Corporation in turn (c) repaying the sum to the Savings Bank.


I am, Sir,

Your obedient Servant,

G L Barstow.


The Town Clerk,


The Committee were of opinion that any sum that might be advanced should be included in the 'One Third' limit that applied to the proportion of the Bank's assets invested in house purchase loans.


A conference between the Bank Committee and the Corporation's Housing & Estates Committee was arranged to consider the matter, and the following Minute of the meeting was subsequently produced:


In accordance with Minute No 550, a conference was held on Monday, the 26th July with Members of the Housing & Estates Committee on the question of making advances to the Bournville Village Trust under Section 7 of the Birmingham Corporation Act 1919.


The representatives of the Housing and Estates Committee were of opinion that, as the proposed advances would not affect the moneys invested with the Corporation for Housing purposes but would be new money supplied by the Bank there would be no objection to the proposal submitted by the Bank representatives. They, therefore, agreed to recommend their Committee to agree to the principle suggested. When definite proposals were formulated as to the amount to be advanced, the rate of interest, period of repayment, etc, it would however be necessary to obtain the approval of the Council and the Ministry of Health to the project.


The Housing and Estates Committee having resolved to proceed on the lines of the Minute, the Bank Committee passed the following Resolution on August 30th 1920:


That the Chairman and Manager be requested to confer with the Housing and Estates Committee with a view to arranging suitable terms as to the amount to be allocated, period, rate of interest etc for the proposed advance to the Bournville Village Trust.


The Ministry of Health was the Government department responsible for Local Government matters at that time, but the Bank was advised (in October 1920) that it was not necessary to obtain that department's permission. It was therefore decided to proceed with the matter and that the City Treasurer and the [General] Manager, in conference with the Town Clerk, should have power to advance a sum not exceeding £5,000 on the lines indicated by the Treasury. Subsequently, the City Treasurer stated that the advance would be made at the rate of 6¼%, repayable in not less than 10 years, subject to certain conditions as regards security, and that he had interviewed Mr Barlow and Mr Appleton (of Weoley Hill Ltd.) when proposals were outlined for meeting the wishes of the Trust.


The Bank Committee meeting held on April 18th 1921 was informed that the Mortgage with the Bournville Village Trust had been completed and the Town Clerk had reported thereon to the Housing and Estates Committee. The period of the loan was 30 years.


In November 1922, the Bournville Village Trust enquired as to whether the rate of Interest being charged on the advance might be reduced. The Bank agreed that the rate would be reduced from 6¼% per annum to the rate (5%) currently being charged to house purchasers. This reduction to be effective from January 1st 1923, but the Bank stated that such rate of interest may be increased in the future (but not above 6¼%) or still further reduced as and when the Bank and Finance Committees jointly agree it was desirable.


In April 1924, the Bank agreed to a further advance to the Bournville Village Trust of £50,000, the loan to arranged on the same lines as the initial £5,000 advance.


Following that further advance, the loan appears to have progressed normally. In June 1927, the Trustees of the Bournville Village Trust approached the Bank for permission to sell a piece of the land that formed part of the security given in respect of the original loan of £5,000. As the total security for the loan, after sale of the piece of land in question, considerably exceeded the amount of the loan, the Bank gave their approval to the proposed land sale.