1 History of US credit Unions
USA CREDIT UNIONS: Excerpts from American History
In 2010, we know there are more than 89 million credit union members. Because a survey conducted in 2008, revealed there were 89 million members of numerous credit unions in the United States of America. With such a growing popularity, we at Members Preferred Credit Union in Idaho Falls thought it might be interesting to take a look at where the concept of banking via credit unions first started.
A credit union is also known as a cooperative bank. It is a smaller non-profit financial institution owned and managed by its members. Its main purpose is to promote thrift, provide credit with reasonable interest rates and provide other financial services exclusively to its members. Most credit unions still exist because of their thrust to further develop communities and sustain international development.
Credit unions started in 1852, when Franz Hermann Schulze-Delitzsh opened two small banks as pilot projects in Eilenburg and in Delitzsch in Germany. Suffice to say, these are considered the first credit unions in the world. From this humble beginning, he was able to develop a highly triumphant urban credit union system. As time went by, credit unions were established one by one all over the world, from Germany to France to Austia to Canada and then to the United States of America.
In USA, it all started at St. Mary’s Bank Credit Union of Manchester, New Hampshire. By most accounts, this is considered as the first credit union in America. It was founded on November 24, 1908 by French speaking immigrants form Quebec, Canada. The old building where St. Mary’s Bank Credit Union first started has since been made into what is known as a Museum of America’s Credit Union.
The success and achievements of credit unions in Canada and in Manchester made a great impact on the banking industry of United States which encouraged Pierre Jay, the banking commissioner of Massachusetts and Edward Filene, a Boston merchant to organize meetings in Massachusetts in 1909 to make a credit union act. However, less than 10 states passed their proposed credit union laws which prevented the growth of the proposed Credit Union Association. But that didn’t stopped Filene from doing what needed to be done. In 1921, he created the Credit Union National Extension Bureau, the predecessor of the Association of National Credit Union which was passed via a public hearing in Estes Park, Colorado in 1934. He established this to develop an effective credit union law in all parts of the United States. He donated $1 million from his own pocket for this project. On, 1925, he hired Roy F. Bergengren, a public attorney from Massachusetts, in order to support his efforts. Bergengren proposed and passed laws supporting and strengthening laws aimed at promoting credit unions. It was by way of Bergengren’s efforts that 14 states passed their credit union laws. As a result, 199 credit unions turned in to 419 serving 108,000 members. And, by 1935, 25 states more passed their credit union laws and 3,372 credit unions soon boasted 641,800 members.
As of 2005, 43.47% of the economically active population in United States, or 86 million citizens were members of credit unions which are non-profit groups enjoying tax-exempt organizational status under federal law. In 2008, the Navy Federal Credit Union became the world’s largest credit union serving government employees, contractors and families with over $35 billion in assets and serving over 3 million members nationwide.
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