Credit unions in the Carolinas were born of unique versions of a similar story. Each saw cause for applying cooperative principles in extending credit among those hard pressed to find it through traditional means.
These histories, now nearly a century in the making, are reminders that our not-for-profit institutions are on a foundation of service to those who need it and of ownership by every member. That legacy of service remains deeply embedded in the mission of credit unions today. For more information on credit unions you may be able to join, please go to www.asmarterchoice.org.
History of North Carolina credit unions
(This information is provided for credit unions to use in educating staff, volunteers and members. For more information, please contact Jeff Hardin).
John Sprunt Hill, the "Father of Rural Credit,” played a huge role in the development of the credit union movement in NC. Hill, who traveled to Europe in 1913 to study the thriving cooperative societies there, returned to NC eager to use the cooperative principles to help family farmers in NC.
A native of Duplin County, Hill was a banker and lawyer who had committed his life to improving the lot of North Carolina's farmers, who had fallen on hard times in the decades following the Civil War. Money was tight and getting access to credit was very difficult. As a result, many farmers would borrow money to pay today’s bills using the next year's crop as collateral. This "crop-lien" system came with interest rates as high as fifty percent (50%), causing many who could not pay back the debt to lose their farms.
Reverend R.H. Whitaker wrote about the abuses of what he called the "crap-lien" system in NC some 100 years ago in his book, Whitaker's Reminiscences, Incidents and Anecdotes, providing a clear picture of how this system took advantage of the family farmer.
Upon returning to NC, Hill set out to bring credit unions to the state. He wrote the McRae Rural Credits Act and tirelessly lobbied the NC General Assembly to pass the bill, which in 1915 became the sixth state credit union act in the US to be passed.
|Exterior of the Lowe's Grove Credit Union, 1916.
Not content, Hill struck out across the state, speaking to farmers in communities from the mountains to the coast. Using soaring rhetoric, Hill encouraged farmers to come together and use cooperative finance to transform their lives. Shortly before Christmas in 1915, Hill spoke to a small group of farmers in the Durham County community of Lowe's Grove. Inspired to act, sixteen farmers combined to deposit $101.75 and charter the Lowe's Grove Credit Union in January 1916 -- the first credit union to be organized in the state as well as the Southern US. The credit union operated out of a small frame building, the location of which is identified today by a state historical marker.
African-American farmers, who endured profound racial and economic discrimination in the Jim Crow South, enthusiastically embraced the concept of mutual self-help using cooperative credit as well. Thomas B. Patterson of Landis (Rowan County) brought twenty-two (22) African-American farmers together on April 19, 1918 to organize the Piedmont Credit Union -- the first credit union organized by African-Americans in North Carolina and the US.
Like many of its day, the Piedmont Credit Union provided a vehicle for farmers to not only save and borrow, but also pool resources to buy supplies for their farming operations. The credit union also provided an opportunity for members to run for leadership positions and elect their own directors at a time when African-Americans were restricted from voting in state and federal elections by discriminatory laws on the books at that time.
In the publication Southern Workman in 1920, Patterson writes a vivid account of activities of the Piedmont Credit Union and the impact of cooperative finance on African-American farmers.
From these modest beginnings, the concept spread throughout the state so that by 1920, thirty (30) credit unions had been organized in the Tar Heel State. Credit unions helped farmers gradually break the hold of the crop-lien system and solve many of the crushing problems they had previously experienced. Over time, credit unions spread from the family farm to businesses including mills and factories, postal facilities, and telephone companies. These credit unions helped everyday people gain access to credit and transform their lives for the better.
More recently, credit union membership rules have changed to allow more people to join, bringing credit unions' "people helping people" philosophy to more and more Tar Heels in recent years. Today, about there are about 85 credit unions serving 3.3 million North Carolinians -- roughly one of every three residents. Despite this incredible growth from humble beginnings, credit unions still exist to serve.
History of South Carolina credit unions
South Carolina began as earnestly, passing a credit union law in 1915. However, it would be unused until 1921 when credit union patriarch Roy F. Bergengren met with Clemson University professors Dr. W.W. Long and Dr. W.H. Mills to organize the Clemson College Cooperative Credit Union and open it in 1922.
Mills, the U.S. Department of Agriculture specialist in charge of farm financial relations for South Carolina, was appointed to develop credit unions and promote fire insurance among farmers. He organized Clemson College Cooperative CU among disabled soldiers taking vocational training there, and from twenty-three members with just over $107 in loans as of February 1922 it grew to forty-three members and $2,118 in loans by June 1 that year.
The following year, three changes were made to the South Carolina Credit Union Act, and Bergengren felt they would clear the pathway to further organization: (1) granting credit unions the power to borrow from various sources and discount member notes; (2) allowing members to purchase shares in installments; and (3) authority to make any investment already legal for savings banks.
In September 1924, Principal Rosa B. Cooley of the Penn Normal Industrial and Agricultural School at Frogmore, St. Helena Island wrote The Credit Union Bridge--America's first credit union periodical--noting that the St. Helena Cooperative Society hoped for a credit union very soon to serve its farmers. March 1925's The Bridge referenced The State, which reported "that the cooperative society had reorganized under South Carolina Credit Union Law and has been chartered as the St. Helena Cooperative Credit Union."
Ms. Cooley again wrote The Bridge "with great gladness that the (credit union) is actually in existence and in working order. There has been a real demand from the people for this step." There was sentiment for St. Helena's as the first credit union in the state based on the cooperative society's organization in 1918, yet that title would remain with Clemson College Cooperative CU.
Second would be Charleston Postal Cooperative Credit Union, organized in May 1924 on the enthusiasm of U.S. Postal Department Head of Service Relations Henry Dennison, who wanted credit unions for all postal employees. Charleston Postal Cooperative CU President J. Gorman Thomas was prominent in the statewide movement, signing the South Carolina Credit Union League charter in 1934 and serving as its managing director until 1959.
Despite positive amendments to the state credit union law in 1923, credit union organization was sluggish and the decade concluded with six such institutions, a condition attributable to the Great Depression. When 1934 brought about the Federal Credit Union Act and the foundation of CUNA and the South Carolina Credit Union League, the environment for growth was established and five years later there were thirty-two credit unions in the state. Further growth in total credit unions came to an abrupt halt by World War II, driving down their numbers and challenging not only the resources of the South Carolina league but optimism for it. Thomas persisted.
"That interest is alive and keen in the entire credit union movement," Thomas stated at the SCCUL 1948 Annual Meeting. "We should by all means continue to carry the movement through and ever onward."
Today, approximately 70 South Carolina credit unions serve more than 1.4 million citizen-members--a testament to the fortitude of those early leaders and to the value of the Palmetto State's not-for-profit financial cooperatives.