The Rochdale Society of Equitable Pioneers, founded in 1844, is usually considered the first successful cooperative enterprise in the world. A group of 28 weavers and other artisans in Rochdale, England set up the society to open their own store selling food items they could not otherwise afford. This is used as a model for modern cooperatives, following the Rochdale Principles of democratic control and equitable distribution of profits.
The beginning of the Credit Union Movement goes back to 1849 in Germany. The country was suffering from a severe depression as a result of the industrial revolution that had upset the economy. Towns were crowded with the unemployed, men were reduced to beggars and there was starvation. In the farms, drought had destroyed the crops in succession, plunging farmers into debts from usurious moneylenders; forcing them to forfeit their cattle, properties, and even their homes.
The Mayor of Flammersfield, in southern Germany, Frederick William Henry Raiffeisen and lawyer Herman Schultze-Delitzsch were deeply troubled by the plight of the people.
Schultze-Delitzsch realized that the poor needed money more than food so he set up mutual self-help credit societies which were mainly in the cities. These societies were called Schultze-Delitzsch Societies.
Raiffeisen introduced a practical brotherhood of Cooperative Credit Societies in the rural areas. The villagers had to pool their meager savings and lend to each other at interest rates lower than the existing market rates. The people had little money but they accepted this idea and amassed a small fortune collectively, which they lent out at low interest rates to the members. Raiffeisen then organized the credit unions into a federation.
The credit union idea took a great leap across the Atlantic Ocean at the turn of the 20th century, to Canada in North America. Alphonse Desjardins, a reporter at the Canadian Parliament became concerned with the unscrupulous moneylenders in his hometown, Levis, Quebec.
Desjardins learned of the development of the cooperative credit unions in Europe and after studying them, he established the first credit union in Levis, Quebec, Canada in 1900.
Desjardins carried the credit union idea to the United States in the same year and the first credit union established in the United States was the St. Marie Parish Credit Union in Manchester, New Hampshire
Edward A. Filene, an American philanthropist and businessman, had learned about credit unions during his trip to India. On his return, he joined hands with Desjardins and spent a million dollars of his personal fortune in promoting the credit unions in the United States. Filene set up the Credit Union National Extension Bureau in Boston and helped to get the first credit union law written and enacted in the United States.
“There have been three great names in the first century of credit union history – Frederick William Henry Raiffeisen, a German; Alphonse Desjardins, a Canadian; and Edward A. Filene, an American”. US President Truman in 1950.