MADISON, Wis.–Cut the cake: today is the birthday of the father of America’s credit union community.
It’s no overstatement to note that without Ed Filene’s substantial support, credit unions in the U.S. would never have grown as quickly as they did, if they had grown at all.
Edward Albert Filene was born Sept. 3, 1860, in Salem, Mass., the son of William and Clara Ballin. He would go on to work in the family business, amass a fortune, and leave a name and a legacy known not just in the United States but Canada and even the rest of the world, using some of his personal wealth to basically underwrite the cost of launching credit unions (and their trade association) in the United States.
In the same year Abraham Lincoln won the presidency, Filene was born the second of five children to William Filene, a German-Jewish immigrant, and the former Clara Ballin, also a German immigrant. His father would leave law school in Berlin to become a peddler of women’s apparel in Massachusetts, beginning with several small retail shops before founding the department store that would make his surname famous.
Edward Filene graduated from high school in Lynn, Mass., and passed the entrance exam for Harvard University while working in his father’s business. But he gave up his plans for a Harvard education in 1890 when his father became seriously ill. He and his brother, Abraham Lincoln Filene, reorganized the store as William Filene’s Sons Company, eventually shortening the name to Filene’s. In 1909 he helped launch what was initially called the Automatic Bargain Basement (prices on unsold merchandise were automatically marked down at regular intervals), business that become a retail pioneer better known as Filene’s Basement.
While still running the store Filene became well known for a number of progressive employment practices, including profit-sharing, health clinics, paid vacations and insurance, as well as a minimum wage for female workers and a five-day, 40-hour work week. All were considered more than progressive in their time.
None of that, however, was enough to guarantee his survival at the company, and he was ousted from store management, although he did retain his title as president
A Social Conciousness
His exit from management, as well as the wealth he had already accumulated, were fortuitous for credit unions, which might have gotten off to a much slower start had Filene had not both the time and money to invest.
By the early 1900s Filene’s social consciousness had already spread beyond his own company. He helped to get the first Workmen’s Compensation law passed in 1911, for instance, and during his life was also active in founding the Good Will Fund, was chairman of the Metropolitan Planning Commission of Boston, and worked with the Boston, U.S. and International Chambers of Commerce, and the International Chamber of Commerce. He backed the formation of the League of Nations after World War I, although its creation never took place (it would take another “war to end all wars” before the United Nations was formed).
But it was another employee benefit he created while at Filene’s that would grow far beyond the store: an employee savings and loan association that would eventually become the Filene Employee’s Credit Union (which would eventually be merged into Webster First Credit Union).
Edward Filene came to learn of the credit union concept while traveling around the world in 1907. While early credit unions were already operational in Germany, Filene discovered the concept of cooperative banks while in Calcutta, India, where the co-ops were getting support from the British colonial government. He urged his friend, Franklin D. Roosevelt, to consider a similar organization in the Philippines with funding from the U.S. government.
Filene had observed in the U.S. how mass production was creating a factory-based working class and he became concerned that for the economy to truly grow ordinary American workers needed loans at reasonable rates, as well as a place to save for rainy days.
Creating Credit Union Legislation
In 1908, Filene joined with Massachusetts Banking Commissioner Pierre Jay (after whom NASCUS’ highest award is currently named) to hold hearings on creating credit union legislation, and in 1909 the first comprehensive CU law in the United States, the Massachusetts Credit Union Act, was passed (it would become the model for the Federal Credit Union Act signed into law by President Roosevelt in 1934). Just 52 miles from Boston, the first credit union in the U.S. would begin officially operating in Manchester, N.H. in 1909.
Filene organized the National Association of People’s Banks (using a name borrowed from Europe), but that effort struggled until 1921 when Filene hired passionate credit union pioneer Roy Bergengren to lead the new Credit Union National Extension Bureau.
Filene would eventually donate approximately $1 million to the Extension Bureau (which was renamed the Credit Union National Association at the famous meeting in Estes Park, Colo. in 1934).
CUNEB (credit union abbreviations began early) had four goals:
- Bring about the laws needed for credit union development in the various states.
- Organize some credit unions in each state that could serve as examples to others.
- Expand number of credit unions to the point that they could create self-sustaining state federations (leagues).’
- Combine the federations into a self-sustaining national association.
Filene and Bergengren’s work would eventually help create state laws in 26 states, revise legal frameworks in five others, and the FCU Act. Bergengren had wanted national legislation first, but Filene disagreed, arguing that a national law would be better if it were based on recognition of the diverse circumstances of America’s workers and communities. Bergengren would later win a disagreement with Filene, who had wanted the U.S. government during the Great Depression to allow for $100 million in reconstruction credits to be placed with CUs. Bergengren argued such a move would make CUs an agency of the government, and that it was far more important to “teach people how to help themselves.”
Honored in CUNA Bylaws
At that meeting in Estes Park, the founding bylaws of CUNA included this: “In grateful recognition of the fact that Edward A. Filene is the (Friedrich) Raiffeisen of America – that he first brought cooperative credit to the United States – that he created in 1921 and financed from 1921 to 1934 the Credit Union National Extension Bureau in order that there might be a sustained development of cooperative credit in our country – in free acknowledgement of the unique debt which we and succeeding generations of credit union members owe and will always owe him – we make a part of these our by-laws, not subject at any time to amendment, this acknowledgement – and we create the office of Founder of this Association and name Edward A. Filene to that office for life. Thereafter said office shall be abolished.”
CUNA’s first official building in Madison, Wis., was known as Filene House, with President Harry Truman on hand to dedicate the building in 1950. Today the Filene Research Institute’s name continues to pay homage to his legacy.
Edward A. Filene died in Paris, France, in September of 1937.
At right, U. S. credit union founders Edward A. Filene, Roy F. Bergengren with Claude R. Orchard