Why Do Credit Unions Exist?

Credit unions exist because at the root of human motivation, people like to feel they are caring for themselves, rather than at the mercy of powers beyond their control. The credit union movement began in Germany during the mid-1800s, following a devastating potato famine that left many farmers and families literally starving to death. The industrial revolution was beginning, with poor wages and working conditions leading average citizens to feel undervalued and muted in their sense of self-worth. All of these conditions pounded upon the human spirit, making the climate perfect for the cooperative principles of credit unions.

Prominent individuals like Herman Schulz-Delitzsch and Friederich Raiffeisen presented ideas of cooperative principles to ordinary working class people, who saw the value of creating something for their own population. Lords and other great land-owners and industrialists were willing to loan money to farmers and craftsmen during these times, but at usurious interest rates that often lead to default which resulted in loss of home, land, and other assets. The early organizers talked to groups of people and challenged them to think about forming a “people’s bank” where peers would set the terms and manage the operations of the organization. Thus, the credit union movement was formed.

The principles and practices of these “people’s banks” spread throughout Europe and finally to the United States in the early 1900s. The term used to describe these organizations became known as “credit unions,” but their inspiration and purpose remain as the guiding forces today. People sharing a common bond, a sense of being a part of something, and a mission to contribute for the betterment of all is the spine of the credit union system. These individual characteristics continue at the heart of the human spirit and continue to be the catalyst for credit unions to remain relevant and strong.

Call Federal exists because more than 50 years ago, a group of manufacturing employees, mostly hourly and some mid-managers, decided they could improve the financial life of their fellow employees by forming this credit union. Volunteers contacted the proper organizations and agreed to do the legwork with telling the employees about the credit union and getting them the forms necessary to open an account. They solicited the support of the company officials to allow payroll deduction and space to be available for members to transact business. The partnership promoted a more financially healthy workforce, thus leading to better productivity and loyalty to the company. These same elements exist today, but require more thoughtfulness in keeping the common bond relevant. This explains our business development strategy to seek smaller groups within our field of membership that share a closer common bond. We can attach to their common bond and bring the same values to the members as did the early credit unions in Germany and the United States.

In summary, credit unions exist because people like to feel a part of something that adds value to themselves and others. Doing good things and a willingness to volunteer are part of self-esteem. Credit unions still provide an opportunity for volunteers to own and govern the operation and to feel they are contributing to something greater than themselves. Membership connotes that sense of ownership, and regardless of any other psychological reason, people like to own something.

At Call Federal, we like the idea of the “people’s bank.” We are and have always been here for you.

What can we help you with today?  Find out more about becoming a member.