The Credit Union idea is a simple one. People should
be able to pool their money and make loans to each other. This idea
evolved from early cooperative activities in Europe.
The first true credit unions were started in Germany
in 1852 and 1864. It was the only way many individuals of lesser
means were able to save and borrow money.
Since that time, the guiding principles have remained
the same: 1. Only people who are members can save with, and borrow
from, the credit union; 2. Loans are made for prudent and productive
purposes; 3. A person's desire (character) to repay is more important
than the ability (income) to repay.
Members are borrowing their own money and that of
their friends. These principles still govern most of the world's
credit unions.
As the 20th century began, the credit union idea
surfaced in Canada. Their success influenced two Americans, Pierre
Jay, the Massachusetts banking commissioner and Edward Filene, a
Boston Merchant. In 1909, they helped to provide the legislation
in the state of Massachusetts to start the first credit unions in
the United States.
By 1925,15 states had passed credit union laws and
by 1935, 39 states had credit union laws. Growth was slow. In 1934,
Congress passed a federal credit union act which permitted credit
unions to be organized anywhere in the United States.
After World War II, the growth of credit unions
and membership grew rapidly. Today, there are more than 72 million
Americans who are credit union members. This growth is also reflected
on a global scale where persons every- where realize the benefits
of belonging to a financial cooperative.
