Tuesday, September 6, 2011

Book Review - Cooperative Banking: A Credit Union Book by Roy F. Bergengren

Not to be confused with his unimaginatively titled later work Credit Union: A Cooperative Banking Book (1931), Roy Bergengren's Cooperative Banking: A Credit Union Book (1923) was his first full length publication. Having been hired by Edward Filene a mere three years earlier to direct the project of promoting credit union development first in Massachusetts and then nation-wide, Cooperative Banking is a fascinating reflection of both the state of the credit union movement and Bergengren's thinking near the beginning of his long career as a credit union champion.

The most apparent difference between Cooperative Banking and many of Bergengren's subsequent works is his focus on international examples of credit unionism. In his later books, the bulk of Bergengren's writing draws upon his experiences with an enormous variety of domestic credit unions for evidence and emphasis. However, the pool of domestic examples from which he could draw in 1923 was fairly small given the fact that only a handful of states had passed credit union enabling legislation, and even the Massachusetts movement (the strongest and most organized at the time) boasted a total membership of less than fifty thousand. As such, instead of leading with a description of the sparse credit union development in America, Bergengren first introduces the readers of Cooperative Banking to the promise of the credit union idea by providing an overview of the success of cooperative banking in Germany under the leadership of Friedrich Raiffeisen and Hermann Schulze-Delitzsch. After outlining the process by which the movements founded by these two men grew to an enormous scale and helped to ameliorate many social problems, Bergengren argues that the two models of credit union development that had emerged over the previous decade and a half in America were not unprecedented new socio-economic experiments. Rather, they represented the spread of successful systems that had been subject to continuous refinement for more than half a century before reaching the United States.

With the credit union's pedegree firmly established, Bergengren locates examples of the urban (Shulze-Delitzsch) and rural (Raiffesen) models of credit union development in Massachusetts and North Carolina, respectively. Devoting a chapter to the experience of each state, he both notes the issues that the different types of credit unions solved for their potential members and gives numerous specific examples from actual credit union practice. In the urban industrial environment, he argues, credit unions help put loan sharks who prey on financially naive workers out of business as well as encouraging thrift through accepting and putting to work the small savings of those with modest means. In the country, not only did credit unions allow for farmers to get cheap credit, but he notes that many of the organizations also became de facto purchasing co-operatives, obtaining bulk items such as fertilizer for up to 30% less than the members would have paid retail. Though still quite recent, Bergengren argues that such examples demonstrate the enormous potential benefits of continued credit union development in a wide variety of environments.

In addition to being a powerful example of early American credit union movement propaganda, Cooperative Banking also offers an interesting window into the nature of the relationship between banks and credit unions in the movement's early years. By the time of Bergengren's death in the 1950s, the for-profit banking industry was beginning to view credit unions as potential competitors. However, Cooperative Banking shows that, in the 1920s, many bankers viewed credit unions in a positive light since they usually deposited their surplus funds in banks and served as a stepping stone by which people of modest means might raise themselves economically to the point where they would utilize bank services. Bergengren repeats at several points in the book that credit unions were a supplement to the banking system, and the the credit union law in the state of Georgia was actually passed with the support of that state's banking lobby.

Another historically valuable element of Cooperative Banking can be found in the book's final chapter, entitled "The Credit Union--Democracy and Other Things." In it, Bergengren lays out his perspective on the larger problems then facing America, such as labor unrest and economic depression. Interestingly, he understands those issues as ultimately deriving from the ascendancy of fractious partisanship over the unified patriotism that the country had gotten a taste of during the First World War. The solution that he argues for is very reflective of the era's progressive values; namely, that the "best and brightest" of the various elements of society should come together and, putting the interests of the whole society above partisan concerns, dispassionately and rationally help assemble a social order that justly balances the interests of all. This position is especially fascinating since, later in his career, he became much more skeptical of the use of state power for promoting even a positive agenda (for instance, he successfully opposed Federal subsidies to the credit union movement in the New Deal, believing that such support would destroy the credit union movement's independence). As such, the chapter suggests that, in light of his other work, Bergengren's intellectual starting point was fairly conventional early 20th century progressivism, and that the origins and nature of his deviations from that ideology over the course of his later career might be a fascinating subject for further research.

In sum, Cooperative Banking: A Credit Union Book is a lucid and well written view into the realities of the credit union movement, combining statistical data, anecdotes, and a sweeping historical perspective. Written at the beginning of his decades-long self-described "crusade" for economic democracy, the book is a vital read for anyone who wishes to better understand either Roy Bergengren's career as the leading voice of American credit unionism or the early credit union movement in America.

No comments:

Post a Comment