later, credit unions took root in Germany. Organized by Herman Schulze-Delitzsch and Friedrich Raiffeisen, these early credit unions became the model for today’s credit unions in the United States. Distinguishing features of these German credit unions included:

 

  • Democratic governance;

  • Each member has one vote, regardless of the size of the member’s deposits;

  • Member-elected board of directors; and

  • Volunteer based.

 

The crop failure and famine of 1846 caused Schulze-Delitzsch to organize a cooperatively-owned mill and bakery that sold bread to its members at substantial savings. Schulze-Delitzsch took this cooperative notion to address the needs of credit, too. In 1850, he organized the first cooperative credit society, known as the people’s bank.

 

Raiffeisen sought to provide credit to farmers. He formed the Heddesdorf Credit Union in 1864 to help German farmers purchase livestock, equipment, seeds and other farming needs.

 

In 1900, at the start of the 20th century, the credit union concept crossed the Atlantic to Levis, Quebec, where Alphonse Desjardins organized La Caisse Populaire de Levis. A court reporter, Desjardins became aware of loan sharks charging outrageous interest. In response, he organized this first credit union in North America to provide affordable credit to working class families.

 

Nearly a decade later, Desjardins helped a group of Franco-American Catholics in Manchester, New Hampshire, organize St. Mary’s Cooperative Credit Association. This first credit union in the United 

States opened its doors in 1909.

 

As a result of the efforts of Edward Filene, a merchant and philanthropist, as well as Pierre Jay, the Massachusetts Banking Commissioner, the Massachusetts Credit Union Act became law April 15, 1909. The Massachusetts law served as a basis for subsequent state credit union laws and the Federal Credit Union Act, which became law 25 years later.

 

During the 1920s, the U.S. credit union movement became increasingly popular. Families had more money to save and could afford products like automobiles and washing machines. They, however, needed a source of inexpensive credit to purchase these goods. The popularity of credit unions grew because commercial banks and savings institutions generally showed limited interested in offering such consumer loans.

In 1920, Edward Filene hired Roy Bergengren, a poverty lawyer, to manage the Massachusetts Credit Union Association and to promote the development of credit unions. Within a year, Massachusetts chartered 19 new credit unions.

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A Brief History of Credit Unions

 

For more than 100 years, credit unions have provided financial services to their members in the United States. Credit unions are unique depository institutions created not for profit, but to serve their members as credit cooperatives.

 

The earliest financial cooperatives date back to the beginning of 19th century in England. A few decades