But as savers and borrowers with Bradford and Bingley prepare to vote on whether it should turn into a bank, warnings are being issued about the erosion of a Great British Institution.

Campaigners fighting to save Britain's building societies are pitted against a band of "get rich quick" money-makers known as "carpetbaggers". Their aim is simple - to reap the instant profits derived from stock market flotation.

Building societies date back 200 years to the time of the industrial revolution. Workers who were lured from rural areas into towns by the prospect of jobs, came up against a chronic shortage of decent property.

They decided to take matters into their own hands by contributing a share of their wages to a central pot, until enough had been raised to build a home - hence the name building society.

A ballot was then held among members for who would live in the house and the whole process would start again. Instead of shareholders, each saver had a mutual stake in the society.

Soon the idea became such a success that members began investing their savings with societies and borrowing from them, and helping to contribute to the UK's high level of home-ownership.

And so it stayed for two centuries, until a change in the law allowed building societies to renounce their mutuality in favour of becoming a bank, complete with shareholders and plc - public limited company - status. Abbey National was first off the blocks when it converted in 1989.

Since then some of Britain's biggest building societies, including Halifax, Alliance and Leicester and Woolwich, have followed suit. An estimated 16 million members have made the switch.

In each case savers and borrowers have walked away with a handsome one-off cash windfall and seen their stake converted into tradable shares. A saver with £1,000 in a Halifax account would have netted a one-off cheque for £1,465.

Halifax account holders netted thousands of pounds each

The wave of de-mutualisations and prospect of quick cash spawned a breed of opportunist called carpetbaggers. Their aim was to spread small investments across a range of building societies, then sit back and watch the windfalls come in.

Jonathon Green's Dictionary of Slang says the term "carpetbagger" dates back to just after the American Civil War of 1861-5. It was used to describe northerners who moved to southern states, carrying everything they owned with them in their carpetbag - which they claimed qualified them as property owners entitled to political recognition. The word came to mean anyone who was an opportunist.

Their late 20th Century incarnation had remained fairly anonymous until a former royal butler, Michael Hardern, launched a very public attempt to force the hand of the Nationwide with the promise of a multi-milion pound payout for members.

Mutual holds a slim majority

So far he has failed. Last summer the building society's board survived a second postal ballot, albeit with a wafer thin majority. But with Mr Hardern showing no sign of giving up, analysts say it is just a matter of time before the Nationwide converts.

That would be against the balance of professional advice. The Consumers' Association points out that banks cannot offer rates as generous as building societies since they have the extra burden of paying share dividends - money a mutual can return to members.

A survey by the magazine Moneyfacts, which compiles financial information, found nine of the 10 cheapest standard-variable rate mortgage lenders in 1998, and eight of the top 10 Tessa providers were mutual building societies.

Uncertainty hounds mutuals

Pam O'Keeffe, a spokeswoman for the Building Societies Association, says buildings societies are more than holding their own in this competitive market. But she wonders how long they can continue under the sustained attacks of carpetbaggers.

"The future of the Nationwide has been called into question twice in the last two years. This makes for too much uncertainty in the world of business," she says.

The already-de-mutualised societies say that since conversion they've never looked back. The Abbey National has seen its initial share price rise from 130p to over £10 and claims that its plc status makes it more efficient and better able to diversify.

In an effort to ward off carpetbaggers, several societies raised their minimum investment by hundreds of pounds. When this started to deter genuine investors, societies such as Nationwide, Britannia and Coventry wrote in charitable assignment clauses that would force new investors to hand over a windfall to a good cause.

Recently the momentum has swung back behind mutuals staying as they are, but the allure of a fat-cheque means they will always be on their guard against the ambitious carpetbagger.

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