The first “classic” cooperative — the Rochdale Society of Equitable Pioneers — was founded in 1844 in England as a way to combat poverty and high interest rates. A group of workers organized a store and purchased shares to raise capital to buy goods at less than retail price. They then sold the goods to their members at a discounted price.
The first “credit” cooperatives first formed in Germany. In 1849, Germans Hermann Schultze-Delitzsch and Friedrich Wilhlem Raiffeisen took the cooperative idea that worked so well in Rochdale and formed “credit societies.” Instead of providing access to goods at discounted prices, however, these credit societies provided their members (small tradesmen and workers on Schultze-Delitzsch’s part and small farmers on Raiffeisen’s) with much-needed cash at affordable prices. These “credit societies” weren’t true cooperatives, however, as they depended on the charity of wealthy men for support.
Later, Raiffeisen rethought the basic idea and, in 1864, organized an actual credit union. He believed that people— by working together and pooling their savings — could create a valuable credit resource not otherwise available to them. The fundamental principles on which his credit union was established still guide every credit union today.
For more information about other periods of credit union history, click on the links below.