Your $1-Million Question: What's Up With This Week?

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So imagine yourself this week on the hot seat opposite Meredith Viera on "Who Wants To Be A Millionnaire?" You've already gotten past the tough, trick questions on history of U.S. vice presidents, had to blow the Ask The Audience lifeline on a question related to some pop star you've frankly never heard of, and amazed everyone by nailing the $125,000 question thanks to your secret love-hobby with metallurgy. Now, with America watching, Viera poses the $500,000-question: "This week, credit unions everywhere will celebrate what?" Not believing your incredible luck, before Viera even can finish giving you your four options you shout out, "International Credit Union Week-Final Answer!" and suddenly you're sitting on a cool half-mill.

Your heart never stops pounding as those rotating spotlights shine brightly on you, the bom-bom-bom-bom drum beat sounds, and Viera asks you if you're ready to go for the million-dollar question. You gulp, and shake your head yes. Viera asks, "Why are credit unions celebrating International Credit Union Week." You deflate, and suddenly you're kicking yourself because you only half-listened to the trivia contest at the last chapter meeting as you tried to finagle a second dessert, claiming it was time to serve the underserved.

This week there will be proclamations, special newspaper inserts, and employee and member parties all in honor of International Credit Union Week. But why? And how did we get here?

Few people know, and those who do know little. And who could blame them? After all, you owe International Credit Union Week (and your job) to a couple of long-dead Germans, Herman Schulze-Delitsch and Friederich Raiffeisen. They appear in black-and-white photos as a couple of stern, old men, whom younger generations will likely never embrace unless they're perhaps repackaged as HS Diddy and Herr Freddy R, who improve the financial lot of consumers as the stars of "Pimp My Bank."

Ironically, credit unions will be filled with baked goods this week, even though their roots lie in a famine. In the 1840s (known in Europe as the "hungry forties"), much of what we now know as Germany was in the grip of another crop failure. Maybe it's because history often isn't fair, but at least in the U.S. Raiffeisen is often given most of the credit as the pioneer of what we would know as a credit union. But according to several historical accounts, in addition to research done by the World Council of Credit Unions, it was really Schulze-Delitsch who deserves more of the credit (union). As the Industrial Revolution took hold in Europe, more people were moving to cities seeking work, only to find themselves living in poverty. Numerous tradesman also found their own livelihoods becoming obsolete. In 1850, Schulze-Delitsch organized what is generally believed to be the first cooperative credit society known as a "people's bank," a concept you still see alive and well in Germany.

Around the same time, Raiffeisen had worked to organize a cooperatively-owned mill and bakery that sold bread to its members at substantial savings (meaning people now save their bread at a place that began as a place to bake their bread) in rural Flammersfeld. In the process he learned an early lesson that is now a fundamental underpinning of modern credit unions and the various management schools available to CU executives. His Society for Bread & Grain Supply was dependent upon donations from wealthier patrons to buy the flour. The problem was the effects lasted about as long as it took to eat the bread, and he realized the members of the co-op weren't seeing any ongoing benefits. It is a lesson manifested now in the "not for charity" piece of the credit union motto.

Schulze-Delitsch and Raiffeisen were not unknown to each other, and one account calls the former a "mentor" to the latter. Schulze-Delitsch had arrived at the same conclusion, and he urged Raiffeisen to alter his business model to one of self-help. In other words, poor farmers and poor city dwellers were going to have to work together and pull themselves up by each others' bootstraps if they intended to improve their lot in life. Members were all connected in some way, forming the first credit bureaus. In 1864, Raiffeisen founded the Heddesdorf Thrift and Loan Society. Membership was open to anyone who bought at least one share in the institution, and they could pay for that share in installments.

Almost simultaneously, by the way, in England in 1844, a group of weavers were banding together to form what was known as the Rochdale Society of Equitable Pioneers, which as part of its incorporation drafted a set of workable business practices that included an emphasis on democratic participation and the return of profits to members.

You may know the names Filene or Bergengren for their work in founding credit unions in this country, but Schulze-Delitzsch makes them look like they worked three-day weeks and took afternoons off. By the end of his life, he is credited with helping found some 1,900 cooperatives with 466,000 members, along with regional and national banks.

I'm glossing over a couple of decades, but Raiffeisen's and Schulze-Delitsch's ideas thrived, and it is estimated that just prior to the onset of World War I, some two-million people belonged to People's Banks in Europe at the same time the first credit union in the United States, St. Mary's Bank, was beginning to operate.

So there's your International Credit Union Week lesson. Keep it in mind-maybe it will help win you $1 million.

Frank J. Diekmann is Editor of The Credit Union Journal and can be reached at fdiekmann

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