Friday, June 26, 2020

Filene's Credit Union

On June 26, 1934, Congress passed the Federal Credit Union Act, allowing for the creation of what is now known as CUNA (Credit Union National Association). Credit unions provide a safe place for people to save and borrow at reasonable rates. While there were many factors that led to the Credit Union Act, one of its most influential advocates was Boston businessman Edward Albert Filene (1860-1937).

The name Filene is most familiar to people in connection with the retail chain established by his father William (who changed his name from Wilhem Katz). Edward Filene, along with his younger brother Lincoln, took over the running of the business in the early 1890s and were responsible for numerous retail innovations - most notably their Automatic Bargain Basement store at which clothes purchased as seconds (overstock, warehouse clearance, etc) were priced down every six days. They also ran their business with a wide range of uncommon-at-the-time employee benefits.

In 1907, not long after the Filene's chain was acquired by Federated Department Store, Filene decided to become a world traveler. While visiting India, he became intrigued with the Agricultural Cooperative Banks that were becoming popular in the country's small villages. With government support, these cooperatives offered small business loans that would normally be denied by larger banks. He came home and began researching the principles involved and discovered that his interest in cooperative banks was widely shared, particularly among a large group of fellow descendants of German Jews (who are said to have wanted to banish the perception of the Jew as userer). The support in his home state was so strong that the Massachussetts Credit Union Association opened in 1914.

Filene traveled from state to state speaking about credit unions. When CUNA was established in 1935, Filene, through the Twentieth Century Fund Foundation, appropriated $25,000 to support it. Throughout his career, Filene found ways to make the lives of those less fortunate just a little better (affordable quality clothes, employee benefits), and he strongly believed that credit unions would offer a chance at success to a whole new segment of American society.

This post was originally posted on June 26, 2017.

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