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History of Credit Unions

From their origins, credit unions were unique depository institutions created not for profit, but to serve members as credit cooperatives. The earliest financial cooperatives date back to the beginning of the 19th century in England. In the mid-1800's, Germany was the first home of credit unions as we know them today:

• Democratically governed;
• Each member has one vote;
• Member-elected board of directors; and
• Volunteer based.

In 1900, 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 the outrageous interest being charged by loan sharks and organized the credit union to provide relief to the working class.

In 1909, Desjardins helped a group of Franco-American Catholics in Manchester, New Hampsire, organize St. Mary's Cooperative Credit Associaltion - the first credit union in the United States. Spurred by the attention of Edward Filene a merchant and philanthropist, and Pierre Jay, the Massachusetts BankingCommissioner, the Massachursetts Credit Union Act became law April 15, 1909. The Massachursetts law served as a basis for subsequent state credit union laws and the Federal Credit Union Act.

With the upswing of the U.S. economy in the 1920's, the credit union movement became increasingly popular. People had more money to save and were able to afford products such as automobiles and washing machines. However, they needed a source of inexpensive credit. Because commercial banks and savings institutions were not generally interested in providing consumer credit, creit unions began growing.

In 1920, Roy Bergengren, a poverty lawyer, was hired by Edward Filene to manage the Massachusetts Credit Union Association and promote the development of credit unions in that state. Within a year, Massachusetts chartered 19 new credit unions. Encouraged by this success, Filene organized and Bergengren managed a national association to promote credit unions throughout the country, the Credit Union National Extension Bureau. By 1925, 26 states had passed credit union legislation and by 1930 that number grew to 32 states with a total 1,100 credit unions.

President Roosevelt signed the Federal Credit Union Act in 1934, forming a national system to charter and supervise federal credit unions. Credit unions grew steadily in the 1940's and 1950's. Our own H.C.T.A. Federal Credit Union was formed on April 23, 1953. By 1960 credit union across the country has grown to more than 6 million people in over 10,000 federal credit unions. Today approximately 8,600 federally insured credit unions now serve 85 million members with $600 billion on deposit.

(Exerpts from the NCUA Website)