When a season of failed crops in seventeenth-century Germany led to widespread poverty, villagers pooled their money in an effort to save themselves from poverty and starvation. They formed a jointly owned mill and bakery that sold bread to members at affordable prices. Savings accounts and small loans also were available. The modern credit union movement grew out of an idea that people could work together to create solutions to meet their financial needs.
The first organized cooperatives, credit unions, and credit societies started in Europe in the mid-nineteenth century. In the early 1900s, the credit union idea crossed the Atlantic, and in 1909, Massachusetts was the first state to pass a state credit union act. In 1921, Edward A. Filene, a Boston merchant, and attorney Roy F. Bergengren worked through their Credit Union National Extension Bureau to get effective credit union laws in all states and on the federal level. By 1935, there were over 3,000 credit unions operating in 39 states and serving more than half a million members.
During the Great Depression, the treasurer of a midwestern credit union summed up the credit union philosophy when he said that credit unions were "not for profit, not for charity, but for service." In 1984, the World Council of Credit Unions approved the nine International Credit Union Operating Principles that remain the cornerstone of the credit union movement. They are:
Open and voluntary membership
Democratic control
Nondiscrimination
Service to members
Distribution to members
Building financial stability
Ongoing education
Cooperation among cooperatives
Social responsibility
Credit unions were created to enable people to pool their financial resources to help themselves and each other. Today, there are nearly 8,000 credit unions in the United States with close to 90 million members.
The medium of exchange used in trade or commerce.
A business agreement in which a bank, credit union, or other financial institution agrees to hold and pay interest on money deposited. The customer may withdraw some or all of the money, but not by writing a share draft or check.
Money that has been borrowed from a creditor (lender) by a debtor and that must be repaid. Loans may also be referred to as liabilities.
A not-for-profit financial cooperative owned by its members. One is eligible to join a particular credit union if he or she belongs to the field of membership defined in its charter. All members have the right to democratically elect a board of directors. The board gives the credit union’s management and staff general instructions. Historically, credit unions encourage thrift among members and provide them with credit at a low rate.
An arrangement in which each participant is part owner of an asset or group of assets. For example, people have formed a cooperative (sometimes known as a co-op) to democratically share ownership of a business or apartment building. A credit union is a financial cooperative.
1. A legal agreement in which a borrower receives something of value now by promising to pay the lender for it later. When the item of value is money, the agreement is called a loan. When the item of value is a product, the purchaser buys it ’on credit.’ 2. Belief in the trustworthiness of a person or entity that borrows.
A person who sells goods for profit.
A period of about 10 years, beginning in October 1929, during which many people lost their jobs and many companies went out of business throughout the world. Desperate unemployed workers took their families on the road to look for work.
Revenue left after all expenses--labor, materials, overhead, etc.--are paid. Profit is one of the principal motivations behind investing and business.
Today there are nearly 10,000 credit unions in the United States serving over _______ members.
The correct answer is: 85,000,000. Today, there are over 85 million credit union members in the United States.
The first credit union act in the United States took place in _______.
The correct answer is: 1909. In 1909, Massachusetts was the first state to pass a state credit union act.
The Boston merchant who worked toward getting effective credit union laws passed was _______.
The correct answer is: Edward A Filene. In 1921, Edward A. Filene, a Boston merchant, and attorney Roy F. Bergengren worked through their Credit Union National Extension Bureau to get effective credit union laws in all states and on the federal level.
