CREDIT UNION

credit cooperative formed by an organized group of people with some common bond who, in effect, save their money together and make low-cost loans to each other. The loans are usually short-term consumer loans, mainly for automobiles, household needs, medical debts, and emergencies. In less developed countries these loans are particularly important, constituting the only credit source for many people, and are used primarily for farm production and small business enterprise. Credit unions generally operate under government charter and supervision. At annual meetings, the members elect the directors, the credit committee, and the supervisory committee. The credit-union movement stems from societies founded in the middle 1800s by Friedrich Wilhelm Raiffeisen in Germany and Luigi Luzzatti in Italy. The first credit union in the Western Hemisphere, where the greatest development was to take place, was organized in 1900 at Lvis, Que., by Alphonse Desjardins, a legislative reporter whose work had impressed him with the hardship caused by usury. Desjardins also helped organize the first U.S. credit union in Manchester, N.H., in 1909. In that same year, Massachusetts passed the first state law recognizing credit unions. A study by the bank commissioner Pierre Jay and strong support by Desjardins and Edward A. Filene, a Boston merchant, facilitated passage of the law. In 1921, to accelerate U.S. credit union growth, Filene set up and financed the Credit Union National Extension Bureau. In 1934 the Credit Union National Association (CUNA), a federation of credit-union leagues, was established by the credit unions themselves to take over the work of the bureau. In 1940 CUNA broadened its membership to include the Western Hemisphere, and in 1954 the CUNA World Extension Department was created to facilitate progress in Australia, Latin America, and Africa. In 1958 CUNA became a worldwide association.