Full faith and credit unions
The history of credit unions has been deeply intertwined with religious faith for decades. In 1909, the first credit union chartered in the United States was a faith-based institution – St. Mary’s Cooperative Credit Association of Manchester, New Hampshire. The credit union originally founded under the name of “La Caisse Populaire, Ste-Marie” (“The People’s Bank of St. Mary) was established with the assistance of credit union pioneer, Alphonse Desjardins, a man of faith and a religious journalist. Under the leadership of the late Monsignor Pierre Hevey, Pastor of Sainte-Marie’s parish, the mission of the St. Mary’s credit union was to help American mill workers save and borrow money to make ends meet. The almost $1.5 billion in assets institution still exists today as St. Mary’s Bank and its deposits are insured by the National Credit Union Administration (NCUA). According to the NCUA, not only did Alphonse Desjardins assist in the creation of St. Mary’s Bank in the U.S., but he is also credited with bringing credit unions to North America as early as 1901.
Faith-based credit unions have significantly declined in number over time, but the “people helping people” philosophy remains engrained in the credit union movement’s fabric at large. Credit unions are faith-based whether they are connected to religious institutions or not because their members strongly believe and have the utmost confidence in the cooperative principles of shared member ownership, non-for-profit status, volunteer governance, and community activism. In the mid-19th century, the credit union movement’s Founding Fathers Freidrich Wilhelm Raiffeisen and Hermann Schulze-Delitzsch exercised their faith anchored in Christian values to answer the call to address the widespread poverty and financial exploitation faced by farmers and workers in Germany. Desjardins authored a book entitled, “The Cooperative People’s Bank – La Caisse Populaire” (published by the Russell Sage Foundation, 1914) where he cited much credit and admiration for Schulze-Delitzsch and Raiffeisen. He also attributed the origins of the movement back to the days of the early monte de pieta established by the Catholic Church in the 1400’s. Monte di pieta is an Italian phrase translated in English as a “mountain of piety.”
Montes di pieta were established by monks of the Franciscan order who were very aware of the predatory financial abuses carried out by the moneylenders of their day. According to the literary work, “Loans and Favors, Kin and Clients: Cosmo de’ Medici and the Monte di Pieta” (published by the Journal of Modern History 61, 19189), a Florentine monk named Marco di Matteo Strozzi, preached against usury, advocated on behalf of the poor and collected funds from the wealthy faithful who were concerned about the privations of the needy. These ‘mountains of charitable contributions’ became pawnshop-like reservoirs of credit where loans were made to the poor with their personal property pledged as security. Unlike the pawnbrokers of today, the monte di pieta charged very low interest rates, if any at all, and upon payment the item was returned. Desjardins certainly recognized the nexus between faith, the Church, montes di pieta, and credit unions.
Historically, some might say the first credit union actually occurred in the days of the first apostles during the early Christian Church era. Interestingly, Luke the physician’s writings in the Book of Acts may allude to the credit union movement having its origin in antiquity. During this period of the early Church, there was a dispute between the newly converted Hebrew speaking widows that were from Jerusalem and the Jewish Christian women who came from abroad who spoke Greek. These complaints alleged the unequal and unfair financial distribution of the Church proceeds. Then, believers sold all their possessions and gave the proceeds from those sales to God by placing it in the trust and care of the apostles. The monies were then pooled together into a general fund for distribution to those Church members who were in need.
When the board of Apostles heard the complaints of the neglected widows, they appointed a management team of seven men who were trustworthy, unwavering in their faith, and spiritually mature. These seven men or deacons were charged with the daily management and operation of the shared cooperative Church fund. Consequently, the needs of the members were fairly and equitably met. By definition, a credit union is a not-for-profit, member-owned, financial cooperative that encourages savings, provides affordable loan products, and offers other financial services. The pooled funds and the services rendered to the members of the Church in some ways matched that definition. Like most credit unions, this first prototype arose out of a socio-economic problem. There, a common associational bond existed in the simple fact they were all Christians, similar to the commonalities of our present faith-based institutions. The early Church cooperative governed by a volunteer board of directors or board of apostles serving as fiduciaries, chaired by James the brother of Jesus (see Acts 21:18), a management staff of deacons appointed by the board (see Acts 6:1-6), and the Holy Spirit as the regulatory auditor of the fund (see Acts 5:1-11), indeed fit the description of a credit union’s governance structure.
Even today, religious organizations play a crucial role in the growth and success of credit unions. Churches, synagogues, and other faith-based institutions often provided the initial funding, facilities for meetings, and a community pool of potential members. Faith, trust, and solidarity naturally and spiritually found in these religious communities were crucial in fostering the cooperative spirit essential for credit union success. Members felt more comfortable saving and borrowing and the credit union was pre-disposed to lending to members because of shared faith and values. Credit unions also inspired by religious principles, have been integral in promoting social and economic justice and inclusion. Minorities, women, and people of modest means who were typically excluded by banks have depended on credit unions as their preferred and primary financial institutions. By offering affordable, quality loans while encouraging savings, credit unions helped to mitigate the impact of predatory lending and financial exploitation.
The history of credit unions is a testament to the power of full faith in action. Deeply rooted in religious values of cooperation, ethical finance, and community empowerment they have played a significant role in righting the wrongs of the past. While the specific religious character of credit unions may have evolved in most cases, the spirit of their founding principles continues to guide their operations and philosophy.
