Martin Luther King, Jr., Credit Unionist

While reading Paul Thompson's historical novel The Credit Union Woman a while back, I was struck by an aside about how, during the Montgomery Bus Boycott, an attempt was made to form a credit union. Since then, I've been wondering about what came of that initiative, and today being Martin Luther King Day felt like a good reason to do a bit of research on the topic.

The boycott itself persisted from December 1, 1955, when Rosa Parks refused to give up her seat, until December 20th, 1956, when the Supreme Court ruling ending bus segregation took effect. In that time, African Americans in Montgomery got intensely organized under the umbrella of the newly formed Montgomery Improvement Association (MIA), which held regular mass meetings and brought together leaders from a broad cross-section of the community. While the impetus for that organization's establishment was handling the logistics of the boycott, it also became a vehicle for advancing other civil-rights related projects, one of which was a credit union.

The first mention I could find of the MIA advancing the idea of forming a financial institution is in a May 24th, 1956 document entitled "Recommendations to MIA Executive Board," in which King lays out a series of restructuring suggestions for the organization. Among these ideas, which were approved by the Executive Board on May 30th, includes the recommendation that:

In order to valuably utilize the present relaxed phase of the bus situation and capitalize on the prevailing enthusiasm and amazing togetherness of the people, a strong emphasis shall be placed on ... increasing our economic power through the establishment of a bank. ... The Banking Committee [co-chaired by Ralph David Abernathy] shall meet immediately and make application for a charter through the Federal Home Loan Bank in Greensboro, North Carolina. If the charter is denied at this level a committee shall be immediately sent to Washington to appeal for a charter through the head office of all savings and loan banks. The program committee shall be requested to allot more time in the mass meeting to the voting and banking committees for purposes of the idea over to the people.

In the months that followed the idea of forming black-owned financial institutions apparently continued to percolate. In an essay written immediately following the Supreme Court decision that ended legal racial segregation on the buses in December, King expressed that two of the MIA's six "continuing goals" had to do with finance:

1. To establish the first bank in Montgomery to be owned and operated by Negroes. We have found that in the present situation many Negroes who are active in the protests have been unable to secure loans from the existing banks.

2. To organize a credit union. As a result of the protest, there is a strong desire among the Negroes to pool their money for great cooperative economic programs. We are anxious to demonstrate that cooperation rather than competition is the way to meet problems.

 According to a footnote in the May 24th document, the MIA abandoned the idea of chartering a bank shortly thereafter, having learned that they would be required to front $400,000 to obtain a charter. The credit union project continued apace, however, and on February 24th, 1957, a widely circulated Associated Press article reported that "Rev. Harold Clement[s], chairman of the MIA's credit union committee, said an application has been filed for a federal charter and 'we expect to get approval in two weeks or so.'"

Unfortunately, Clements was overly optimistic, and their application was rejected by the Bureau of Federal Credit Unions in 1957, and again in 1959 due to, according to another footnote, "policies prohibiting charters for civic groups." Despite these setbacks, however, King's interest in the credit union model remained strong. When he took up as pastor of Atlanta's Ebeneezer Baptist Church in 1960, he made the following recommendation to the congregation:

In order to instill the idea of thrift in our members and reveal the concern of the Church for the economic life of man, a committee shall be appointed to organize a Credit Union. [emphasis in original] This Committee will immediately seek to secure a federal charter. It is hoped that every member will become associated with this Credit Union, and that it will become a powerful economic agency in the community. The need for such an institution in our Church is unquestioned. It will serve as a channel through which members can save money, and it prevents them from having to go to downtown finance companies to make loans for exploitative interest rates. Actually when the individual makes a loan from the Credit Union of which he is a member, he is borrowing from himself.

The project apparently didn't come together immediately, King's father and co-pastor reiterated the call in his recommendations for the 1968-1969 year, stating that "in order to instill the ideas of thrift in our members and reveal the concern of the church for the economic life of man, a committee shall be appointed to organize a credit union." As a result, the Ebeneezer Credit Union was established in 1971 as part of a wave of Black Church Credit Unions that took root in that era.

In any case, the above was about what I was able to track down with Google and an afternoon's work, so there's much left that I'm curious to learn more about, especially where the papers of the MIA's Credit Union Committee might be housed, and what happened to the Ebeneezer Credit Union. Fortunately, I will hopefully have a chance to find some answers on my coming trip in March, when I plan to take a train across the South conducting oral history interviews with African American credit union elders. If you, dear reader, happen to have any relevant information as to sources (or interviewees) please leave a comment or otherwise get in touch!

The McCarthyite Roots of the Campaign to Tax Credit Unions.

While working my way through Dorfman's masterful history of the credit union movement in Pennsylvania, I came across the following passage, which I think provides some useful historical context to the current political scrape over the tax-exempt status of credit unions:

Through the early 1950s, CUNA ... faced two major legislative issues. Most critical was an attack on the tax-exempt status of credit unions led by various private groups that opposed cooperatives in general and tax-exempt cooperatives in particular. Simultaneously, many state and local governments looked at credit unions as potential sources of additional tax income.

Attempts to repeal the tax exemption of federal credit unions were made in 1951 and 1953. This campaign may have been related to the general "red scare" of McCarthyism that swept the nation during and after the Korean confrontation. In any case, the two bills attacking the tax-exempt status of federal credit unions introduced in the 82nd Congress were not successful. (315)

This narrative seems to lay bare the hypocrisy of the present American Bankers Association campaign to tax credit unions. At the moment, the primary banker argument is that the tax exemption is "outdated" and was originally intended to benefit small credit unions, so they have been proposing that only mid-to-large asset-size credit unions should be taxed. However, back in 1951, when the credit union movement was made up almost entirely of the former type of small-scale organizations, the bankers not only wanted them taxed, but were willing to stoop to McCarthyist demagoguery to advance that goal.

This fact that bankers have been gunning for the credit union tax exemption since the days when most credit union "staff" were volunteers and a "branch" was more likely to be a lock-box in a church basement than a brick-and-mortar store-front belies the lip service they've recently been paying to small credit unions in their attacks on the movement. For several generations, it seems, a major goal of the banking lobby has been to maximize their shareholders' profits by hobbling the spread of the democratic, cooperative model of finance. They were able to bring the mutual savings banks to heel by the 1950s, and the 1980s saw the demise of the S&Ls, but credit unions not only survived, but are growing, and now provide 96 million Americans with a direct stake in their financial institution. As such, the above quote demonstrates that most recent banker campaign should not simply be understood as an isolated controversy primarily driven by the needs of the moment, but it should rather be seen as the latest skirmish between the forces of economic oligarchy and economic democracy in a conflict over the structure of the financial system that is more than a century old.

John McCullough on the Ultimate Goal of the Credit Union Movement (1960s)

From "Credit Union Philosophy: Some Implications" by John McCullough, who was the president of the Pennsylvania Credit Union League from 1966-1968. Published some time in the 1960s, found excerpted on page 353 in But For Service: A History of the Credit Union Movement in Pennsylvania by Mark H. Dorfman.

The ultimate goal of the credit union movement is that each man should be master of his economic situation rather than its servant. It is where economics and democracy come together that the credit union can exist; it is to keep these two together that the credit union does exist.

The democratic nature of the movement must be preserved. It can and should be implemented in such a way that it will achieve economic efficiency. The movement as a whole can and should offer to credit unions and their members all the services they need, including the unique informational service of the credit union and all the collateral services which are usually offered by other financial institutions.

Our task then is to keep our organized movement both democratic and efficient." 

Primary Source: Roy F. Bergengren's Death Certificate

Given his place in the history of the American credit union movement, I found myself thinking this morning that it'd be appropriate to do something the commemorate Roy F. Bergengren's birthday. However, after poking around a bit, I realized that such a date was nowhere to be found on the internet. Fortunately, I knew he died in Vermont, so, after a bit of poking around, I was able to find a copy of his death record, which reveals that he was born on June 14th, 1879 in Gloucester, Massachusetts, and that he was buried in Forest Hills Cemetery in Boston. Any fellow history nerds want to join me on a pilgrimage to Massachusetts next June to honor "the Chief"?

1951 - Quote on the Purpose of the Credit Union "Common Bond"

The following quote is excerpted from Richard Y. Giles' 1951 history Credit For the Millions: The Story of Credit Unions, which bears the endorsement of the Credit Union National Association (CUNA):

The purpose of limiting membership is to create a little community in which people know each other well enough so that they can lend money to each other on character without paid investigators, collections agents, and the usual paraphernalia of the small loan business. Democratic control of the credit union is safeguarded by the fact that each member has only one vote, thus avoiding domination by a few large investors. This, too, helps make it intimate.

There are credit unions in large industrial plants with thousands of members and equally large credit unions serving municipal employees in big cities. Here the intimacy of the membership does not amount to much. Office space is rented, real estate taxes are paid, and paid employees may number several score. Still the credit union is able to charge the same low interest rates, pay reasonable dividends on saving, and provide insurance on loans and shares, simply because despite its size the credit union is motivated by the desire to serve its members rather than make a profit from them. The directors and officers continue to serve as volunteers out of the public spirit. Among the elected officers only the treasurer's work is paid. (25)

Book Review: The Black Church Credit Union by Perry E. Henderson, Jr.

Written by an African-American Baptist pastor for his Doctor of Ministry dissertation at the end of the 1980s, The Black Church Credit Union is an incredibly rich and fascinating source. Its author, Perry E. Henderson, Jr., was the latest in a long lineage of prominent black clergymen that stretched back to the Civil war, and his father was instrumental in launching the church’s credit union. Motivated in part by the fact that the institution was put on probation for a high numbers of defaulting loans in the catastrophic economic environment of downtown Dayton, Ohio in the early 1980s, the book is structured around a twelve week long “consumer education workshop” that Henderson designed for his capstone project.

The book begins by providing an overview of the historical forces, such as the experiences of slavery and racism, that uniquely shaped the communities that congregated in black churches. African Americans are unique, he argues (following a line of thinking that stretches back to W.E.B. Dubois), in that they have been both “forbidden to be African and never allowed to be American,” (14) so a great deal of their sense of belonging and community has been provided by their churches. As a result, the centrality and influence of those churches means creates an imperative that they take a leading role in facilitating the healing and advancement of their communities, for which task the credit union model is eminently suited. He then goes on to make arguments in favor of the credit union model within the frameworks of the Christian concept of "Stewardship" and traditional African communalism.

As a result, the curriculum of Henderson’s workshop (a detailed outline of which serves as the book’s conclusion) goes far beyond the standard sorts of courses that many credit unions offer to their members. In addition to the predictable discussions of “budgeting” and “applying for a job,” participants delved into topics such as Black Theology, the history and practice of the credit union model, and “One Covenant Under God Sharing Economic Resources.” Drawing on the complex history and identity of his church's community, the course not only aims to make its participants more informed consumers (and thus better credit risks), but also to make them more knowledgeable and committed members of the community that forms the credit union's common bond.

This sort of symbiotic relationship between the credit union and its founding community, in which strengthening one strengthens the other, is characteristic of what historian Ian MacPherson has referred to as the "populist culture" in credit unions, which is interesting to see in the context of the late 1980s. The number of credit unions in the United States peaked in 1969, and the movement's further growth came in the form of consolidation, as credit unions merged to achieve economies of scale, which had the unintended consequence of diluting their attachments to their founding communities.

As such, Henderson's promotion of populist credit unionism during a period of its precipitous decline is particularly interesting. Although a great deal more study is needed on the topic of African American credit unionism, the book hints at the possibility that the developmental trajectory of African American credit unionism may have differed substantially from that of the white-dominated movement. As David Beito notes in From Mutual Aid to the Welfare State, while white fraternal mutual aid organizations were largely crowded out by the welfare state starting in the 1930s, the racist socio-economic order meant that black fraternal orders and churches were taking an almost exclusive role in meeting the needs of African Americans in the South well into the 1960s. Could a similar dynamic have been at play in the credit union world, delaying the onset of managerial domination that had pretty much consolidated itself in the main-line credit union movement by the early 1990s?

Despite its brevity (weighing in at a mere 118 pages), The Black Church Credit Union is an incredibly rich source. Bouncing between discussions of the Deuteronomic Covenant, African communalism, credit union history, the historical roots of black theology, and economics, Henderson offers the reader a fascinating window into a branch of the credit union movement that is too-often omitted from the official histories. Not only should it be considered essential reading for those interested in further investigation of the history of African American credit unionism, but it also offers useful insights to anyone interested in cultivating a deeper understanding of the dynamics "populist" credit unionism in any context.

A Few Updates

As I've been recently busting my butt getting Cooperative Vermont (a cross-sector initiative) off the ground, Credit Union History has been back-burnered as of late. However, in the last few months there have been some interesting credit union history related developments, so I figured I'd throw out a few quick updates:

1. Paul Thompson's new book on recent credit union history is out! I reviewed the manuscript a little while back, and the final product is a solid work of history that should be on the reading list of every American credit union board member and employee.
2. Jeff Hardin has started a project looking into the history of African American credit unionism in North Carolina. Check out this CUiNsight post for more info.
3. "The American Credit Union Industry Still Embodies Its Founding Values" by Stuart Levine is an interesting essay that draws a strong connection between an understanding of CU history and the movement's present values.

As for this site, one of my goals for the summer is to really delve into the pile of old issues of the Credit Union Bridge that have been occupying my book-shelf, so stay tuned for any gems that might turn up... :)