Credit Union History Part III - Transitioning through Italy and Canada

The story of US credit unions eventually leaves Prussia, and moves to Italy.  Italy is a transitionary point in our story.  As it turns out, the transition throughout this story parallels the development of representative democracies in modern world history.  During the nineteenth century, Italy transitioned from a feudal patchwork of fiefdoms to one constitutional monarchy.  This was a transitionary step for many modern countries on their way to representative democracies.  Please pay attention to the subtle backstory in this first video.

The protagonist of this part of our story is a man by the name of Luigi Luzzatti.  In many ways, his life looks much like that of Hermann Schulze-Delitzsch.  He was born in a corner of an authoritarian monarchy.  He receives a good education in order to continue the family's tradition in the middle-class.  He becomes a champion of political reform.  But unlike Schulze-Delitzsch, Luzzatti is the member of a minority class: he is Jewish.  Also unlike Schulze-Delitzsch, his country is going to achieve far more freedom and democracy, and will allow him to reach the very pinnacle of political power within his lifetime.  

In addition to the personal story of Luzzatti, also pay attention to the details of how the cooperative lending institution changes.  At first, Luzzatti wanted to simple transport the Schulze-Delitzsch system to Italy.  But in the end, he improved it - and those improvements would change the starting point for the US cooperative lender that we now call a credit union.  Click the image below to be taken to the 11 minute video.

Just in case you didn't notice, the principles outlined in my introduction of the history of credit unions holds with Luigi Luzzatti.  He established cooperatives to provide support of uneducated and unskilled workers (for instance gondoliers in Venice).  He then established an institution that provided the democratization of financial services.  Next he personally saw the disadvantages of a lack of democracy, so he spent his life supporting democratic institutions (including a short stint as the democratically elected head of state).  The financial institution he founded had unique democratic forms, which were made more democratic by reducing the initial investment required to join as a member.  The democratization of these financial services were further improved by extending the limited liability benefit that many wealthy investors enjoyed.  This was the first incarnation where corporate liability protection was extended to cooperative financial institution members.

Toward the end of the nineteenth century, both democracy and cooperative lending spread throughout Europe.  In the late 1890s, a Scottish cooperative lending enthusiast wrote a book that would inspire the establishment of cooperative lending in North America.  The Scotsman's name was Henry Wolff.  And the first system he inspired would be in Canada.  

The late nineteenth century was a political transitionary time for Canada.  Unlike the United States where our independence was won through war, Canada became their own dominion in the late nineteenth century through proclamation.  Their new status as a democratic dominion prompted patriotism and pride.  It was into this new sense of independence and democracy that cooperative lending found a new home.  The protagonist of this part of our story is really a power couple - Alphonse and Dormien Desjardin.  Alphonse was the founder, and Dormien was the administrator over the short- and extreme long-term.  Alphonse would go on to play a pivotal role in the establishment of credit unions in the United States directly.  Click the image below to see the 18 minute video.

Throughout the establishment of the caisse populaire movement in Canada, Alphonse was in correspondence with both Henry Wolff, and Luigi Luzzatti.  Desjardins successfully transported cooperative lending to America.  He was also the first to adjust the focus to include consumer lending.  The help he had received in founding the caisse populaire system was paid forward when the original founder of the US credit union movement was ready to import cooperative lending to the United States. Desjardins was probably the first in this story to leave his own country to help establish cooperative lending in another country - in this case in the United States.

Again, note that Alphonse Desjardin embodied those principles we discussed earlier.  The caisse populaire was established to democratize banking in Canada, offering financial services for people of limited resources.  Alphonse spent his entire life supporting the fledgling, self-governing dominion of Canada.  His writing and recording skills were used to record all debates in the national parliament.  His system of cooperative lending institutions were established within the most important community to Alphonse - the church.  The church would support the caisse populaire system, and it would support the communities in which it resided.

And now we are right next to the United States.  To further explore how credit unions began in the United States, go to the previous port, or simply click here.