Over the years, I have seen the mission and values ofthe credit union industry expressed in the service brought to itsmembers. I find that looking at the roots of an institution can­remind us of its mission and values and connect us to those whohave gone before us in service. The ­history, mission and valuesthat lead to the establishment of the American ­industry inform ustoday.

The first credit unions were founded on the ideals of self-help,self-responsibility, democracy, equality and solidarity. They wereimbued with honesty, openness, social responsibility and caring forothers. The same values that credit unions bring to their ­memberstoday.

Modern credit unions first took root in Germany in 1847 to­assist farmers and small craft ­businesses that were in dire­financial straits when failed harvests and famines occurred. Thesebusinesses had no access to bank services; they were reliant uponprivate moneylenders. In response, two Germans separately andindependently took ­action. In 1847, Hermann Schulze-Delitzschfounded the first “raw materials association” for carpenters andshoemakers and the first “thrift and loan association,” essentiallythe first credit union, in 1850. Also in 1847, Friedrich Wilhelm­Raiffeisen ­created the first aid association in Weyerbusch forthe rural population. In 1864, he founded Heddesorf Credit Union tohelp German farmers purchase livestock, equipment, seeds and otherfarming needs.

These German credit unions' values included democratic­governance, with each member having one vote, regardless of amember's deposit size, and a member-elected board of directors.Essentially, this is the same governance model that isemployed today. From the ^­German roots, credit unionsquickly began to spread across ­Europe and jumped to ­India and toNorth America.

Alphonse Desjardins founded the first credit union in NorthAmerica, the Caisse Populaire de Lévis in 1901 in Quebec with a10-cent deposit. Desjardins wanted to provide ­affordable credit toworking class families, who were at the mercy of loan sharks thatcharged outrageous interest. In 1908, Desjardins helped found thefirst credit union in the United States, St. Mary's ­CooperativeCredit Association in Manchester, N.H.

The American movement, however, really started in Massachusetts,when Pierre Jay, a banker and grandson of John Jay,the first Chief Justice of the Supreme Court, and EdwardAlbert Filene pushed the enabling legislation in Massachusetts. TheMassachusetts Credit Union Act became law in 1909. It served as abasis for other state credit union laws and the Federal CreditUnion Act of 1934. Filene personally displayed the valuesunderpinning the credit union industry. He is known for buildingthe Filene's department store chain, but moreover, he was anenlightened employer believing that his employees ­determined hissuccess more than any other factor. He took care of his workers,mostly ­women, ­offering them free health care, hourlybreaks and meals. Filene encountered rural cooperative banks, manystarted by women while traveling in Calcutta, India on 1907. He­realized that these types of cooperatives could help ordinaryAmerican workers ­access loans without falling victim to usury andallow them to save for the future.

 In 1920, Filene hired Roy F. Bergengren, who had beena poverty lawyer, to manage the Massachusetts Credit UnionAssociation, where his promotion of credit unions led to 19 newones within a year. Given this success, Filene founded the CreditUnion National Extension Bureau in 1921 and hired Bergengren to runit. Its ambitious mission was to create effective credit union lawsin all states and at the federal level. Filene contributedover $1 million to this effort.

Bergengren travelled the country appearing before statelegislators and recruiting volunteer organizers. In his passionatespeeches, he would state, “The real job of a credit union is toprove, in modest measure, the practicality of the brotherhood ofman.” When Bergengren began his efforts in 1921, there were only199 U.S. credit unions. By 1925, 15 states had passed credit unionlaws, and 419 ­credit unions were ­serving 108,000 members. By1930, 32 states had adopted legislation with atotal 1,100 credit unions, and by 1935, 39 states had passedenabling legislation and 3,372 credit unions were serving 641,800members.

The effort culminated with Franklin Roosevelt signing theFederal Credit Union Act on June 26, 1934, creating the nationalsystem to charter and to supervise federal credit unions. Creditunions have been a shining example of quality service, fair prices,community outreach and ethical dealing. These are the values thatbenefit our communities now and have since the industry's­inception in Germany 165 years ago.

Stuart R. Levine is chairman/CEO of Stuart Levine &Associates
Contact
516-465-0800 or stuartlevine.com