What You’ve Been Told About Credit Union History Isn’t Wrong (But It’s Not Quite Right Either)

Most of us are familiar with the dates, faces and places associated with credit union history. From Raffeisen, Desjardins and Filene to St. Mary’s Bank CU, 1908 and Estes Park, most of us have at least a basic knowledge about how the cooperative system of finance came to be.

None of the information we’ve been given is factually incorrect. However, to paraphrase the late Paul Harvey, you probably haven’t heard “the rest of the story” – namely the contributions that African Americans made to the development of credit unions in the US.

The African American cooperative experience is powerful, inspiring and worthy of our time and attention. Take for instance Thomas Patterson, a farmer in tiny Landis, NC. Patterson helped organize the Piedmont Credit Union on April 19, 1918.

The Piedmont Credit Union is one of the earliest (if not the earliest) African American credit unions organized under the Rochdale Principles in the United States. Once Piedmont got off the ground farmers in other communities followed suit and by 1920, thirteen African American credit unions had organized in NC.

To fully understand the contributions these early credit unions made to history, you have to understand the world that Thomas Patterson lived in. NC farmers, like most in the South, labored under the crop-lien system. The crop-lien system allowed farmers to receive credit to buy food and other necessities. In exchange, the farmer pledged the next crop yield as collateral. Interest rates were often exorbitant – sometimes reaching 60% or more. And of course crop failure didn’t wipe the debt off the books. The system was deeply flawed but at the time, it represented for most farmers the only available option aside from loan sharks.

For African American farmers like Patterson, the Jim Crow laws prevalent throughout the South further complicated life in a variety of ways, including access to credit. If a black farmer needed a loan, it was not unusual for him to need a white person to vouch for his character to even be considered for the loan.

Patterson wrote about these struggles in an article published in The Southern Workman in 1920, noting that the small farmer in NC “has long been victimized by the credit system as it now obtains.” Patterson then remarks that credit unions were the way to “relieve the farmer of this heavy burden.”

Patterson shares how African Americans leveraged the cooperative model to improve their lives. Piedmont members cooperatively bought food, fertilizer and other necessities in order to save money and collectively build wealth. When a farmer needed a loan, the terms were a fixed 6% rate of interest.

The Southern Workman article is perhaps the most vivid first-person account we have of the emerging system of cooperative finance in NC, and the Piedmont story has been neglected for far too long. After all, these early African American credit unions were the first seeds of cooperative ownership and mutual self-help that eventually grew to become a dynamic Community Development Credit Union system that flourishes in NC today.

Equally as important, what African Americans created is an important part of the credit union story.

The League is collaborating with credit unions here in NC and other organizations like The Support Center and the African American Credit Union Coalition (AACUC). We hope to discover together the rich legacy that Patterson and other pioneering African American cooperators have given us.

Helen Godfrey-Smith, the CEO of Shreveport FCU in Louisiana, is researching African American history on behalf of the AACUC. In a recent phone call, Helen shared that in Cajun-influenced Louisiana, they use a word called lagniappe. Loosely translated, lagniappe means “something extra” – or something freely given – a gesture of good will.

I encourage credit unions as well as state leagues and the national trades to evaluate our existing historical narratives and apply the principle of lagniappe to the African American experience. African American cooperators like Thomas Patterson made important contributions to credit union history, and it’s well past time for their stories to be told.

Including their stories is a clear example of lagniappe – and the right thing to do.