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University of Wisconsin. College of Agriculture. Dept. of Agricultural Economics / Cooperation principles and practices: the application of cooperation to the assembling, processing and marketing of farm products, to the purchase of farm supplies and consumers' goods and to credit and insurance

IV. Cooperative purchasing, insurance and credit associations,   pp. 28-39 PDF (3.4 MB)

Page 37

                     RAIFFICISXN HOUSE-MADISON, WIS.
   This is the headquarters building of more than 4,000 credit unions in
the United States.
various state laws, mainly since 1929, and one-fourth under federal charters
during the latter part of 1934 and during 1935. Wisconsin had a total of
credit unions at the beginning of 1986, over 100 of which were organized
1985. The Federal Credit Union Act was passed in June, 1984 and the admin-
istration of the act was placed in a credit union section of the Farm Credit
    Credit unions are found almost entirely-over 95 per cent-in the urban
centers, although the credit union laws are designed to promote their organ-
ization in rural as well as in urban communities. At the beginning of 1986,
81 credit unions were operating in Madison, Wisconsin, a city of about 60,000,
and 10 more credit unions were reported to be in process of organization
that city.
    The membership of each credit union is usually confined to a limited
group who have a close bond of associations, such as to the employees of
single factory, business or governmental unit, or to a professional or fraternal
group. Membership requires the ownership of one or more shares of common
stock usually of $5.00 par value. Additional funds are obtained as loans
commercial banks. The credit union's principal function is to provide personal
credit for its members and at the same time to provide a reasonably safe
to invest small savings. These associations are accordingly called credit
thrift associations. The loans are of a short term nature and are ordinarily
amortized over a period of a few months. Loans over $60 are generally se-
cured. The interest charge must usually not exceed one per cent per month
on unpaid balances.
     The administrative cost and losses in a credit union are usually low
 compared with private credit agencies extending personal credit. This comes
 about through the very nature of the credit union. Its risks are of a preferred
 character, since the group from which membership is admitted has already
 gone through a process of selection. Personal acquaintance is also a valuable

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