“Progress is not the mere correction of evils. Progress is the constant replacing of the best there is with something still better.” – Edward Filene.

Welcome back to our new series, in honor of Credit Union History Month, Following Filene! When last we checked in, our main character Edward Filene was caught up in managing an ever-growing retail empire alongside his brother. So how then, did Filene go from businessman to credit union pioneer?

To answer that, we’ll be tracking Edward Filene halfway around the world to India and the Philippines, where the “Father of U.S. Credit Unions” would have his first encounter with cooperative finance.

Finding inspiration in India

In 1906, at 47 years old and still technically working for William Filene & Sons, Edward Filene decided to travel on an around-the-world adventure. According to the Filene Papers, this trip was a “dream coming true” for Edward. And so, in January of 1907, Filene set off for Japan, the first stop on what would be a nine-month journey.

In February of that same year, Filene made his way to Calcutta, India. By the time he reached the city, Filene was already aware of the cooperatives that had been popping up around the rural parts of the country and was keen to learn about them. In fact, India (under British rule at the time) had, just a few years previously, in 1904, passed the Cooperative Credit Societies Act, designed to protect farmers and low-income citizens from exploitative lenders.

Eager to see the cooperatives for himself, having been a staunch supporter of such ideals (as we covered in part one), Filene enlisted the help of William Robert Gourlay. Gourlay, a Scott, was not only a local member of the Indian Civil Service in Bengal Province but also the leader of Bengal’s cooperative credit societies. Gourlay, acting as Filene’s translator and travel guide, took Filene on a tour of these cooperatives.

While traveling through the country, Filene was shocked by the levels of poverty he witnessed and, according to his notes, determined “exploitation by local land owners and a lack of access to credit to develop the land” as the two key things keeping the villagers poor. The remedy, he concluded, was the expansion of cooperative credit.

Advocating for financial cooperatives in the Philippines

Following his time in India, Filene headed to the Philippines, with financial cooperatives still on the brain. Here, Filene witnessed the same levels of poverty and destitution that he had in India, but without the financial cooperatives that were working to combat the issue. Unlike in India, the villagers lacked the income to form the Agricultural Banks and credit cooperatives the former had.

After seeing the cooperative system in India and how the British government was working to create cooperatives to protect villagers from predatory lenders with cooperative finance, Filene thought that, as the Philippines was an American colony at the time, it would be a great opportunity for the American government to do something similar.

To that end, Filene wrote to President Theodore Roosevelt with his idea, urging the creation of similar institutions in the Philippines to help the locals. While Roosevelt allegedly showed some initial interest, nothing ever came of the correspondence. The Rural Credit Law would not be passed in the Philippines until 1914, and its first cooperative opened in 1916.

Back to Boston

Despite Filene’s initial idea failing, his time in India and the Philippines had opened his eyes to the effect that cooperative finance could have on struggling communities, and he would bring these ideas back with him to Boston. Within two years of his return, Pierre Jay would spearhead the Massachusetts Credit Union Act, and soon after, Filene would enter the credit union space in earnest.

But that’s a story for next time.