Where do credit unions come from?
So, where exactly do credit unions come from?!
A history lesson from the Credit Union Advocacy Committee...
Let’s go way back to the year 1864. Like many parts of the world during this time, Germany was experiencing economic hardship. In particular, rural farmers were struggling to afford to keep their farms running. They needed help in order to end their cycle with loan sharks, who were taking advantage of farmers with little capital and limited resources.
Within recent years, the concept of a “cooperative” was gaining in popularity in Europe. Cooperative mills and bakeries had already taken hold. The farming industry took note and this is when the first credit union was formed. The goal was to establish a safe place to save money and take out loans together, as an industry.
The principles upon which this credit union was built, such as volunteerism, self-help, and consideration of a person’s character as well as their net worth, were the building blocks on which the credit union movement was built.
Eventually, the concept of this cooperative credit union in Germany caught on to other parts of the world. It wasn’t until 1909 that the first credit union was established in the United States, again on the premise to give working class people the opportunity to break free from unfair interest rates and promote thrift and affordable access to credit.
For the next 25 years, the founding fathers of the credit union movement in the United States worked to establish credit unions throughout the country. In 1934, President Roosevelt signed the Federal Credit Union Act into law, which set in motion the credit union industry that we know and love today!
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