Of the pioneers of the credit union concept, Friedrich Wilhelm Raiffeisen (1818-1888) remains among the best known, in part due to the thousands of Raiffeisenbanks that exist in Europe and even the U.S. today. Born in what today is Hamm, Germany, Raiffeisen was mayor of several towns, including Weyerbusch and Flammersfeld, in the 1840s at the same time famine was affecting much of the country. The idea of cooperative self-help came to him as he watched local farmers who had fallen victim to loan sharks, and he responded with a cooperative lending association, essentially the first credit union.
Raiffeisen's fate was intertwined with that of Hermann Schulze-Delitzsh and the fate of both was intertwined with events out of their control. Interestingly, the two men shared an acrimonious relationship and bitter debates.
In the harsh winter of 1846-47, with many people starving to death, Raiffeisen organized a means of supplying bread to the poor. In 1847, he developed a cooperative bakery, and over the next two decades modified the co-op concept. Among the lessons learned: charity was fine providing there were benefactors, but it offered no long-term resolution of the core problems.
In 1849, Raiffeisen developed the Flammersfeld Aid Society for the Support of Poor Farmers, which proposed the collection of deposits that were in turn lent to other farmers to purchase livestock and farm implements. In 1864, he founded the Heddesdorf Thrift and Loan Society based on the concept of self-help and a fixed structure.
Also emerging from Raiffeisen's work was that of the common bond, believing a group sharing common traits acts with greater solidarity and is more likely to fill voluntary roles.
