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June 27, 2014

Historical Echoes: The United States’ First Credit Union–Run Out of a Gentleman Lawyer’s Front Parlor

Amy Farber

St. Mary’s Bank was the first credit union created in the United States, in Manchester, New Hampshire, in 1908. A website honors both the centennial of the institution and the credit union concept. A small museum (see article about its opening) was created near the site of the credit union, which is still functioning.

     A video reenactment of the founding of St. Mary’s depicts speeches by advisor Alphonse Desjardins, a journalist and credit union movement leader from Canada, and Joseph Boivin, a lawyer and the first president of the union. Their speeches describe the need for the credit union (at that time, most banks weren’t in business to serve people of modest means) and encourage the first participants to make their initial deposits. The video then depicts the request for a loan by a widow with a child in need of an operation and a savings plan designed especially for children. The clip mentions that the credit union operated out of the home of Boivin.

     Quite interesting are the interviews with Boivin’s daughter, Gilberte Amyot-Brosseau (1904-2006). (See listing of all six parts.) It isn’t clear exactly when the interview took place, for her death precedes the creation of this commemorative website. She has quite a good memory of living in the same house out of which her father helped the working-class people (primarily French-Canadian immigrants) with their money management needs.

     In Part 4 of the video interview, Amyot-Brosseau describes the lifestyle of the working-class people who needed and valued the services of the credit union:

I remember a lot of people from the mills . . . the mill closed around 5, 5:30 at night . . . they would come up the hill—like ants—because they lived way beyond even what we call the flats. Way down . . . an awful lot of them . . . . People wanted to better themselves. They worked hard in the mills. I remember at quarter past eleven there were girls who would come out of the classroom and one day I said to one of them: why do you always leave before we leave? Oh, she says, I go home, get the hot dinner for my father and I go to the mill to bring it. Imagine . . . these people knew the value of time and money . . . and they wanted to better themselves, and when they heard of the credit union they saw a way of putting a little money aside and trying to build it up . . . that was really what kept them going, I think. The children were told they should save their money . . . and they could stop at our place and my mother would take care of them. They had . . . a tin box and the money would go in that tin box. I think it offered more to the people than a bank did in those days. You paid five dollars I think to belong . . . you had your book—which reminds me that today I am going to open an account today . . . I promised myself I would open an account.

     In Part 3, Amyot-Brosseau describes how the credit union began and how her father set it up in their front parlor without asking her mother’s permission:

Monsieur Desjardins . . . said . . . it would be wonderful for our people. My father says: good idea, good idea. My father had an office . . . downtown. But at home there was the room when you’d come in to the left—he called that his office. It started off very well, people seemed to be enthused . . . . My father said . . . he didn’t ask my mother: do you want to give up your living room? Well, in fact we had two and there was a big sliding door . . . He says . . . I told Monsignor [Pierre Hevey, a leader of St. Mary’s Church] that . . . he could use the front door, the front room. And Mother said: oh that’s fine, that’s fine . . . . But they would usually come into my father’s office instead of going into that room. And there was a hallway and there was a long bench like a deacon’s bench . . . And people would sit down and wait . . . at night sometimes there were people who wanted to see my father—legally—and other times it was for the bank . . . . And of course my father speaking French . . . and my father being a lawyer, they came to him. He did a lot for his people.

     In Part 5, after she recalls the various businesses in the town at the time, who ran them, and how well her family knew them, the interviewer asks: But no banks? She answers:

No bank. No, no. I guess probably the other banks said: well this is so strong with those people, we better leave them alone . . . not try to . . . . Today somebody would come and try, you know, but in those days, they didn’t make the effort. And it was just as good . . . for St. Mary’s Bank.

     A timeline of credit union history from 1849 to the present can be viewed on mycreditunion.gov. It captures the primary legal events. A brief history of credit unions on the website for the National Credit Union Administration goes into more detail, including reference to the hit taken by the industry from the 2008-09 financial crisis.



Disclaimer
The views expressed in this post are those of the author and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author.




Amy Farber is a research librarian in the Federal Reserve Bank of New York’s Research and Statistics Group.


Posted by Blog Author at 07:00:00 AM in Historical Echoes
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Desjardins was more than a journalist. He mainly was the official stenographer of the Canadian House of Commons, effectively the guarantor of the House debates record accuracy.
An incident that played a part in the Caisses Populaires founding: a recent british immigrant was hired to be manager of the Molson Bank ( an anglophone institution)branch in Desjardins hometown of Lévis across the St-Lawrence river from Québec City. In a letter to the bank' head office in Montréal, he proudly boasted that he had signed up the town most properous merchant as a customer. The head office replied that he had one month to close the account and force the merchant to use a much smaller "French bank" .
Desjardins finally realized the depth of discrimination that francophone faced in the Canadian financial market and proceeded to make a runaround the Canadian Bank Act by using the provincial oversight of "trusteeship". Essentially Caisses Populaires would not be a "banking institution" butthe very temporary trustee of people's funds...
In Ontario, the mortgage companies and trust companies would use the same runaround to provide "banking services" for rural and other middle-class customers.

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