This is the story of an idea.  A simple idea:  that people could pool their money and make loans to each other. 

It’s the credit union idea and it evolved from the cooperative activities of early nineteenth century Europe.  The first of these cooperatives was an 1844 marketing cooperative organized by a group of workers in Rochdale, England.  That same year in Germany, Victor Aime Huber began developing and publicizing some of the early European cooperative theories.  The idea of credit societies was part of this effort. 

Hermann Schulze-Delitzsch and Friedrich Wilhelm Raiffeisen created the first true credit unions in Germany in 1852 and 1864.  During 1849, Raiffeisen founded a credit society in Flammersfeld, Germany; unfortunately, this credit society depended on the charity of wealthy men for its support.  Raiffeisen persisted with his initial concept until 1864, when he organized a new credit union along principles still fundamental today. 

These principles were based on several simple ideas:  (1) Only people who were credit union members should borrow there; (2) loans would be made for “prudent and productive” purposes; (3) a person’s desire to repay (character) would be considered more important than the ability (income) to repay.  Most importantly, they were borrowing their own money and that of their friends.  These principles still govern most of the credit unions in the world today. 

In 1900, Alphonse Desjardins organized a credit union (caisse populaire) in Quebec to help the poor, specifically by providing economic backing due to interest rates that were financially crippling.    

Desjardins persevered and devoted a large part of his life to credit union development in North America.  In 1909, he founded other credit unions, including the first one in New Hampshire. 

Two Americans became profoundly influenced by Desjardins’ efforts:  Pierre Jay, the Massachusetts banking commissioner; and Edward A. Filene, a Boston merchant. 

Filene discovered credit unions in a village in India in 1907.  He stopped in Calcuna and met a government official who escorted Filene to a village credit union in operation.  Filene was extremely interested.  Once he arrived at home, he began reading about credit unions to strengthen his knowledge. 

Filene was a progressive thinker, who had begun profit-sharing plans for his employees, instituted other novel fringe benefit programs, founded the “bargain basement” idea in department store operations, allowed employees to engage in collective bargaining and arbitration, established minimum wages for female workers, and advocated a five-day, 40-hour week.  In the early 1900s, such ideas were revolutionary.  Besides his creative approach to business, Filene was also one of the founders of the U.S. Chamber of Commerce. 

As banking commissioner, Pierre Jay made a study of unauthorized banking practices in Massachusetts.  He learned that several groups of employees in the commonwealth had started their own savings and loan organizations. These groups resembled what Henry Wolff, a European, had described as “peoples banks.”  Jay believed that these small associations were providing a needed service, but he wanted to recommend a way to make them legal. 

From Wolff’s writings, Jay turned to the work of Desjardins and others.   He began a chain of correspondence with Desjardins.  This resulted in a 1908 conference in Boston in which Desjardins, Jay Filene and other public spirited citizens participated.  Working with Desjardins, Filene prepared the legislation for what was to become the first general state credit union act in the United States. 

During the formative years of the credit union movement, credit unions quickly discovered that they could expand faster and provide better service if they banded together into leagues on a state-wide basis.  Leagues provided financial and legal advice, organizing know-how and an instrument for credit unions to use in seeking favorable state legislation.  But something more was still needed. 

In 1934, the credit union idea spread so fast that credit unions and leagues in existence recognized the need for a national organization.  At a meeting in Estes Park, Colorado, the Credit Union National Association (CUNA) was formed as a confederation of state leagues.  CUNA replaced the Credit Union National Extension Bureau and Roy Bergengren became CUNA’s first managing director. 

In the same year, Congress finally passed a federal credit union act, which permitted credit unions to be organized anywhere in the United States.  The passage of this landmark legislation created a choice for credit unions.  They could incorporate under either state or federal law.  This system of dual chartering persists to the present day. 

In 1970, the National Credit Union Administration (NCUA) became an independent federal agency and the National Credit Union Share Insurance Fund was formed to insure members’ deposits.  The 1970s brought major changes in the products offered by financial institutions and credit unions found they needed to expand their services.  In 1977, legislation expanded services to credit union members, including share certificates and mortgage lending.  The 1970s were years of tremendous growth in credit unions.  The number of credit union members more than doubled and credit union assets tripled to over $65 billion. 

In the early 1970s, World Council of Credit Unions, Inc. (WOCCU) was established.  WOCCU has become the world’s leading advocate, platform for knowledge exchange, and development agency for credit unions.  WOCCU maintains a global presence and represents credit unions on an international level, delivers the “Sound & Safe” credit union message to government legislators, regulators, donors, credit union organizations, and credit union members; as well as, implements credit union projects with proven, tangible results. 

In 1980, the CUNA Foundation was formed to bring together resources to strengthen the credit union movement in the U.S. and throughout the world.  The Foundation receives contributions from national credit union organizations, leagues, credit unions, and other groups.  This income is then used to fund credit union projects.  The Foundation also has received several grants to train credit union volunteers.  These “Development Educators” spread the word about credit union activity in other parts of the world. 

In July 1996, the D.C. Court of Appeals ruled against NCUA’s policy allowing credit unions to serve multiple common bonds in one field of membership.  The credit union movement rallied support by launching the CU Campaign for Consumer Choice.  The campaign was successful in gaining a Supreme Court hearing on the field of membership issue.  This made the passage of HR 1151. 

HR 1151, also known as the Membership Access Act, allows federal credit unions to reach out to new members, such as small businesses and low income communities.  President Clinton signed the CU Membership Access Act, or HR 1151 on August 7, 1998.