The story of US credit union history would be incomplete without mentioning the contributions made by Black Americans to the industry. To commemorate and honor Black History Month, we’re sharing the story of Thomas Patterson, a credit union pioneer.
As a founding member of the first African American credit union in the United States in the 1900s, Patterson had a significant impact on the credit union movement. His contribution aided African American farmers in obtaining loans, marking an important milestone in the ongoing fight for racial equality.
Thomas Patterson’s Life
Patterson lived and worked in the small town of Landis in Rowan County, North Carolina, in 1918. This was a particularly difficult time for African Americans living in the United States, particularly in the South, only 53 years after slavery was abolished.
The crop-lien system was used by the majority of farmers at the time. Farmers were required to put up their next crop yield as collateral for credit in order to purchase food, fertilizer, and other necessities. The crop-lien system had exorbitant interest rates (up to 60% at times). And whether the crops did well or not, the debts had to be paid.
Patterson stated in the April 1920 issue of The Southern Workman, “Perhaps the greatest disadvantage to the average poor farmer… is a lack of capital.” If he buys fertilizer on time, borrows money, or contracts to be carried over the cropping season, it is usually at such a ruinous rate of interest that few ever escape its tyranny.”
Patterson lived during the Jim Crow Laws era, which established a set of laws at the end of the Civil War. Jim Crow laws required segregation and affected nearly every aspect of African American life in the American South. Despite the fact that slavery was no longer legal, there was still a severe racial imbalance in the South, and African Americans did not have equal access to resources. This disparity extended to financial resources as well. When an African American farmer needed a loan, for example, the law required him to have a white man vouch for his character.
Leading the Change Charge
Patterson knew he had to do something to help Rowan County’s African American farmers or they would be in debt for the rest of their lives.
Patterson and 22 others raised $126 in capital to form Piedmont Credit Union, the country’s first African American credit union, in April 1918. Piedmont members “cooperatively bought food, fertilizer, and other necessities in order to save money and collectively build wealth,” according to a CUInsight article. When farmers needed loans, the interest rate was set at 6%.
Piedmont Credit Union’s model was an unqualified success. Piedmont had 82 members and $1,347.83 in total assets by the end of 1919. Piedmont’s expansion became well-known. By 1920, the state had 13 other African American credit unions.
The establishment of these credit unions marked a watershed moment for the region’s African American farming families. They were able to obtain affordable loans through the cooperative model while avoiding the predatory practices of the crop-lien system.
Patterson’s Contribution to the Modern CU Movement
Despite the fact that Piedmont CU no longer exists, the African-American Credit Union Coalition (AACUC) is headquartered in St. Louis. The AACUC, which was founded in 1999, now serves more than 150 credit unions across the country.
To assist his fellow community members, Thomas Patterson founded the African American credit union movement. He was a pioneer and a leader who contributed to making the credit union industry more equitable. “After all, it is not what a man makes that gives him standing in the community; it is what he saves that counts,” Patterson said. The union assists him in saving.”
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