Community Service

Is CU History Still Relevant?

Our history helps build the framework people rely on when they think about CUs.

October 15, 2013
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The past is essential to the future

There are three elements to history:

What happened usually is indisputable. Why it happened and the present and future significance of what happened are complex and almost always debated.

There never will be complete agreement on the relevance of history, but a coherent narrative is possible if context and perspective are provided and debated.

Without context, history becomes fertile ground for mythology or propaganda. Mythology can, to some degree, unite us by providing common ground on which we express pride in our past and in who we are.

As the newspaper editor in John Ford’s classic movie, “The Man Who Shot Liberty Valance,” said, “When the legend becomes fact, print the legend.”

But history as propaganda is dangerous, and no nation or population is immune to propaganda pushed by leaders, mainstream institutions, or the media. History without context also becomes fertile ground for demagoguery.

We can pay simple homage to our founders and pioneers by posting their sepia-toned pictures in our lobbies and offices. Or we can reprint and frame the powerful Joe Stern political cartoons from the 1920s and 1930s that captured the imaginations of Americans as they learned about credit unions.

But hanging pictures on the wall or putting coffee-table books in our reception areas is akin to treasuring pictures and memorabilia from family ancestors whose stories we’ve forgotten. Value is not always measured by time alone.

The spark that ignited the first credit union fire is as hot today as it was in the beginning, when credit unions were vehicles of socioeconomic reform.

Credit unions were born in the U.S. during the Progressive Era of the early 1900s. Forward-thinking Republicans and Democrats working together recognized that industrialization, immigration, and urbanization were three massive forces drastically affecting the quality of life, so they initiated a series of social, political, and economic reforms that forever altered the American landscape.

During the next three decades, credit unions grew steadily, but slowly, as one state at a time enacted the necessary enabling legislation. Their sole purpose was to provide American workers and their families with a vehicle to practice thrift, build their savings, and have access to affordable credit to be used prudently and responsibly.

Credit unions were designed to be a bridge to economic opportunity and economic justice. “Not for profit, not for charity, but for service,” was one of the movement’s earliest mottos.

Credit unions often were the sole agents available to average men and women as a way to accumulate assets and build wealth. But it took an economic collapse and the Great Depression to accelerate credit union growth. A second reform movement known as the New Deal led to the passage of the Federal Credit Union Act in 1934.

The movement’s founders created a national association the same year, and soon every state had a league that helped create credit unions by the thousands during the following three decades.

The number of credit unions peaked at 23,000 in 1969, but consolidation has led to economies of scale and greater capacity to serve our members. Assets and members have soared.

Credit unions were integral to the nation’s greatest era of economic stability. They helped create the great American middle class that ensured financial stability for untold millions of households.

Today, the middle class is struggling. Median household income has been stagnant or in decline for several decades. Unemployment or under-employment is increasingly common in many once-secure households.

There’s a growing gap between the jobs that will pay well in the future and the number of workers with the requisite education to get those jobs. The ranks of America’s poor are on track to climb to levels unseen in half a century, according to the U.S. Census Bureau.

A tepid economic recovery, the ongoing possibility of a slip back into recession, and a government safety net that is becoming increasingly frayed means the need for credit unions is as great now as it was in 1908 or 1934.

History matters because what we’ve accomplished in the past helps us see what we need to do in the future. We must continue to tell the credit union story of where we’ve been and where we’re going. We must continue to work for legislation and regulations that help credit unions build passionate and enduring public support.

As successful as the credit union movement has been, the general public fails to fully grasp the importance of a not-for-profit, cooperative business model. Too many consumers are not members and have, at best, a vague understanding of credit unions.

Or if they became members through an indirect channel such as auto lending, they may never fully grasp the benefits of long-term membership unless they learn more about our history and our values and why they’re still relevant.

NEXT: Building the structural framework

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