November 4, 1933
THE STATE
Credit Unions:
Роде
Nineteen
Something New in •
the Field of Co-
• operative Banking
THE story is told — and
it is said to be a true
one — that two friends
were together one day, dis¬
cussing neighborhood af¬
fairs and events.
“I understand that tho
Hendersons arc expecting a
new arrival at their home,”
remarked Friend No. 1.
“Well,” said the other
chap, “they can afford to. Jones has
been a member of the Credit Union
for over six years.”
Ilis companion agreed with him.
Quite a number of people are still
unacquainted with the work that these
unions are doing, despite the fact that
they have spread rapidly over tho
country. North Carolina has more
than sixty-odd unions, their individual
resources running from less than a
thousand to seventy-five thousand dol¬
lars. The number of the organizations
is showing a steady increase.
Originating in Europe 75 years ago,
the unions have spread over the entire
civilized world. They crossed the At¬
lantic to Canada in 1900 and started
in the United States — in Massachusetts
in 1909. Thirty-eight states and
the District of Columbia now author¬
ize credit union organization. North
Carolina enacted a splendid credit
union law in 1915 largely through the
efforts of John Sprunt Hill, one of the
state’s outstanding leaders, who has
long been tremendously interested in
cooperative effort. Mr. Hill studied
cooperative credit societies abroad in
1913. In 1915 he organized at Lowe’s
Grove, Durham County, the first rural
credit union in the South, which at¬
tracted nation-wide attention and has
transformed that community into ono
of the most progressive ones in the
state- Traveling on the road from
Raleigh to Chapel Hill one sees evi¬
dences of this fact iu the splendid
Farm Life School at Lowe’s Grove.
Just what is a credit union? How
do they function and what good do
they accomplish? Arc they in com¬
petition with banks or building and
loan societies? Do they offer safety
and security?
Well, let’s see:
Credit unions are organized within
THESE unions ore spreading all over the world.
We've got more than sixty of them, right here
in North Carolina. Mr. Rhodes, who is ossistont
postmaster in Raleigh, explains some of the de¬
tails of organization, operation and results
accomplished.
By H
M
RHODES
specific groups of people who petition
for and obtain from the state charters
permitting incorporation. No cost at¬
taches for the charter or for subse¬
quent supervisory service. There may
bo only a handful of members; or
there may bo eventually more than a
thousand. In all. the same essential
principles of unselfish service apply —
"To promote thrift, honesty, integrity,
business methods and the spirit of
service among its members.” and "To
make loans to its members for pro¬
ductive or provident purposes at rea¬
sonable rates of interest."
Its own members control and man¬
age the credit union; no one else can
belong or have anything to do with it.
Such management is vested in a board
of directors from which officers are
chosen: a supervisory committee (the
audit committee) and a credit com¬
mittee, which will have to do with all
matters of loans and credit. No offi¬
cials arc paid, except the treasurer.
Those who handle money are bonded.
The capital of the union is created
by payments of members for $5 shares
of stock. One or more of these units
may be bought at any time: they may
even be paid for in installments of
25 cents, or multiples thereof. With
a small beginning, usually, and a
definite thrift plan established, mem¬
bers often go on to save quite sub¬
stantial amounts on which they are
paid a good rate of interest. A local
bank in each town or community is
used as a depository.
The funds accumulated are used to
take care of the short term credit
needs of the members. The directors
fix the interest rate, which is within
the legal rate. And in that connec¬
tion, I believe that the credit unions
have done immeasurable good in
eliminating the evils of usurious
money lending; iu helping
people to got away from
the clutches of loan sharks.
Loans in
а ш
onnta of
from a few dollars to sev¬
eral hundred dollars (the
average is probably be¬
tween $100 and $150) for
from a few weeks to twelve
months, are made for any
purpose that will help the
borrower. He furnishes security for
the loan — shares, or some sound col¬
lateral, or an endorsed note. Being
a cooperative bank, the net earnings
after proper reserves are set up arc
divided pro rata among the members.
As 1 said before. we now have more
than sixty of these unions in North
Carolina.
One of these, of which I am par¬
ticularly proud because I happen to
belong to it, is the one in the Raleigh
post office. Organized ten years ago
it now has 120 members and resources
of over $12,000. Many of our mem¬
bers have fine savings accounts made
possible through the practice of sys¬
tematically saving. Also, we have
made to our members, without the
loss of a single dollar thereby, loans
amounting to nearly $100.000* They
need and borrow money for many rea¬
sons- -from helping pay for the ar¬
rival of new babies, to meeting the
emergencies and rainy days of life
for paying taxes, saving insurance
policies, for cash and cooperative Inly¬
ing, etc., etc. Further, the process of
operation has trained our people in
managing money. Other Raleigh
«edit unions are: State Highway
Commission, Pine State Creamery.
State College, News and Observer.
State Employees, and Raleigh Class¬
room Teachers.
At Valdese there is one of the
largest and oldest credit unions in the
state. Another outstanding commu¬
nity credit union is the one at Brass-
town, up in the mountains, which has
been the foundation of the Brasstown
Folk School and which has. bv financ¬
ing the creation of a dairy industry
and enabling tho members to buy pure
bred stock, chickens, hogs, fertilizers,
feed, etc., been the foundation stone
{Continued on page Iwenhj-fnur )
