In the beginning of the 20th century, Jewish immigrants to America founded the first Hebrew free loan societies and credit unions. These institutions helped small business owners–many of whom were new immigrants–to set up shop, circumventing banks that viewed them as credit risks.
The first credit union in New York State was founded in 1911 by the Jewish Agricultural and Industrial Aid Society. It was similar to a free loan society, but charged small amounts for interest. It also made loans to individuals, not just small businesses. Unlike a bank, a credit union is a non-profit organization, “owned” by its membership.
By 1918, ten Jewish credit unions functioned in New York City alone. In 1927, Boston had 139 credit unions, three-quarters with explicitly Jewish names or a majority of whose directors were Jewish. These institutions flourished during the Great Depression, then waned in the late 1940s, when banks started to extend credit lines to individuals and smaller institutions.
Last year, amidst rising bank fees, the Occupy Wall Street protests (and the related Occupy Judaism organization) began. Around the same time, the national association of credit unions launched a new awareness campaign, encouraging customers to leave their banks and place their money in credit unions. It’s not a singular statement that banks are evil–rather, it’s an attempt to return to the communal spirit that helped some of our ancestors stand on their own two feet.
January 12, 2012