To continue our Remembering credit union pioneers series (see also Nora Herlihy), we are looking at the life of Friedrich Wilhelm Raiffeisen, who was born 205 years ago today (30 March 1818).
Growing up as a farmer in 19th century Germany, Friedrich Wilhelm Raiffeisen, understood the financial struggles unique to the rural population. He initiated a local system of financial co-operation that led to the first credit union.
Raiffeisen began a career as a public servant for the Prussian government, paving the way for him to become from 1848 the mayor of Flammersfeld in what is now the Rhineland-Palatinate. During his time in office, his village was unfortunately afflicted by a terrible famine and economic crisis. Raiffeisen presented a solution: a society for grain and bread supply. This new organisation illustrated the success of a community-based co-operation. Raiffeisen would later replicate the system, creating a scheme where farmers could borrow money to buy cattle, the structure again escalated to what we would recognise as a simple version of the contemporary credit union where deposits from members could be used as loans for other members. The first co-operative lending bank for these rural communities was created in 1864, and to manage liquidity across the individual banks Raiffeisen introduced a central bank in 1872.
Raiffeisen’s underlying objective was to enable people to become independent of charity, politics, and loan sharks, which may have some contemporary resonance. Banks merging directly from or inspired by Raiffeisen continue to serve communities across Europe, including Austria, Kosovo, Romania and Switzerland. The Netherlands’ Rabobank’s official name is Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., showing its heritage. Raiffeisen’s ideas live on through these organisations and others, notably through the International Raiffeisen Union, and he remains an inspiration to credit and other co-operators.
