The Credit Union
In today’s society of fast and easy access to credit cards, lines of credit and payment plans it is hard to imagine a time when if you needed something and could not afford to pay for it right away, you could not have it! If someone needs a washing machine, a car, or wants to go on a family vacation there are countless ways to pay for it. Within minutes of making a purchase even if you can’t pay cash, you can walk out the door with the item. But it wasn’t always like that, seventy years ago the average working class family in Canada had very limited access to banks, only a few had bank accounts and even less had credit. Workers lived paycheck to paycheck, had limited savings and little or no access to credit to purchase larger items. Banks were unwilling to give the average worker access to credit which is taken from granted today. In Canada there were many stories of struggling farmers being charged outrageous interest rates to plant their crops and keep their farms. The reason for the lack of Credit was that workers wages were at the time very low, jobs were insecure and precarious in nature. As unions gained momentum workers wages and job security increased as did their demand for consumer goods. The banks were slow to recognize this opportunity and an alternative was needed.
In the late 1800’s farmers in Europe with the same problem came up with a solution, they started to form cooperatives to use their collective power to purchase and sell products, and use their collective incomes and savings to benefit each other. The collective concept grew quickly moved across Europe before arriving in the U.S.A. and Canada. The concept was simple, groups of people with something in common, farmers, churches or workplaces organized a financial cooperative (Credit Union). By opening a savings account, members became a voting shareholder and part owner in the Credit Union. Membership had several advantages, firstly it would help members save and secondly members would also have access to credit and could obtain short- and long-term loans. Member’s savings would be loaned out at reasonable rates to other members, who received a good return on their savings; it was a real win – win situation.
By definition a co-operative is an autonomous association of persons united to meet their common economic, social and cultural needs and aspirations through jointly owned and democratically-controlled enterprise.
In December of 1949 after a great deal of hard work UAW Local 199 announced they had formed a closed bond Credit Union to provide financial services to workers at McKinnon’s Industries . When a charter is approved by the ministry of finance, the Credit Union can be either closed or open bonded, open meaning that it is open to the general public, if it is a closed bonded Credit Union, membership is limited to a specific group, in this case McKinnon workers.
The Credit Union movement was based on seven principles, voluntary and open membership, democratic/membership controlled, member economic participation, autonomy and independence, education training and information, co-operation among co-operatives, and concern for the community. Throughout the following seven decades these principles would help the Credit Union grow into a community based organization that would help countless working families, local businesses and charitable organizations.
The first St. Catharines Autoworkers Credit Union office was located at 3 Chestnut Street in the UAW Union Hall. When the Charter was signed the St. Catharines Autoworkers Credit Union became the 445th Charter in Canada. The initial membership drive goal for 1949 was to have 150 members signed up by the start of the New Year. The first advertising slogan used to attract members was borrowed from actress singer May West “Come up and see me some time” Monthly reports called the Credit Union Corner were posted in the UAW Newsletters that were distributed in the plants, in one of these report workers were encouraged to save whatever they could afford, suggesting that one or two dollars per week would pay for a family summer vacation. In 1951 the board of Directors of the Credit Union passed a motion to provide Pay Day Loans to the members. The purpose of a Pay Day Loan was to “Tide Members Over” if they fell short of money between pay days. Members who owned at least one share in the Credit Union, had been a member for three months and agreed to pay the loan back on the next pay day, qualified for these short term loans. Payday loans are very common today; there is a long list of companies offering them. However, it should be noted that these loans usually come with very high fees. When payday loans were introduced at the Credit Union in 1951 the interest cost was very reasonable, it was the notion of serving the members rather than making large profits, that continues to differentiate the credit union from other financial institutions.
To promote the St Catharines Autoworkers Credit Union, McKinnon’s had representative on the shop floor who would talk about the Credit Union advantage, sign up fellow workers and were authorized to take application for loans. Applications were subsequently reviewed and approved by the Credit Committee. They shop floor reps were called the CU man, wore a CU Man lapel pin and were all McKinnon workers and members of the Credit Union.
By 1953, the membership had doubled and grown to 300 members who worked at McKinnon industries. By 1959 the month before the summer vacation the credit union authorized loans totaling $20,000. With the introduction of the automatic pay roll deduction, membership continued to grow rapidly; the company would make a deduction every pay period and transfer the funds to the employee’s credit unions savings account. Members were also automatically enrolled for a life insurance policy, in the event of death their beneficiary would receive a life insurance pay out of double their account balance up to $2,000. In September due to an increase in membership of 300 new members and anticipated membership growth, the St Catharines Autoworkers Credit Union moved into a larger room at the Union hall moving from room 3 to room 5.
Up to May of 1960, the St Catharines Autoworkers Credit Union was only open on a Saturday, with an increase in membership and savings in the Credit Union which now totaled $150,000, the office hours were increased, opening Monday to Friday. The office hours had a very interesting stipulation; members could arrange to have the office opened, outside of the regular hours, in the event of a financial emergency. In a little over a year loans to members doubled from $85,000 to $170,000 requiring the credit union to borrow funds to meet loan demand. The average account balance of the 1,000 members was $150. By 1962 the Autoworkers Credit Union had over 2,000 members and $650,000 in savings. The workers at St Catharines Autoworkers Credit Union Joined UAW local 199, January 11th 1962. In 1965 the Autoworkers Credit Union moved out of the Union Hall and into their own premises on Niagara Street.
Since those early days the Credit Union has continued to grow. In 1981 the St. Catharines Autoworkers Credit Union changed to an open bond status, this meant that everyone in the community, not just autoworkers could become members. To reflect this change the name was changed to Family Savings Credit Union. In 1999 the Credit Union merged with Avestel Credit Union which was based in Hamilton. Avestel had a very similar blue collar history to the Autoworkers Credit Union in St. Catharines. Avestel Credit Union, like the St Catharines Autoworkers Credit Union was also initially a closed bond Credit Union for Stelco employees, formed in 1939 with only $54 in savings and $50 in loans. In 2000, Following Family Savings merger with Avestel the membership of the Credit Union once again authorized a name change to the current name FirstOntario Credit Union. To reflect he change in status and to attract more members it was felt that the a more inclusive name was required.
In the aftermath of the mergers and name changes many of the leadership of the UAW/CAW Autoworkers Union who had formed the Credit Union were not happy. They felt that they had lost control and ownership of something they had helped build for their members. To this day many still felt that it should have remained the Autoworkers Credit Union. The reality is for the Credit Union to survive it needed to compete with banks, offer more services, and increase it’s members, to do so a larger more inclusive Credit Union had to evolve.
For me looking back to 1999 it was a traumatic time to serve as a board member, merging with Avestel was touted as an opportunity to reduce cost and increase services due to the economy of scale, short term this was far from reality. This was an exciting and scary endeavor and a strategy many Credit Unions were being encouraged to use to survive. There were many heated meetings during this time. Two large organizations merging with similar but different cultures, different accounts, dual employee responsibilities, banking system issues, the initial problems and cost were many, the benefits were few, even re naming the Credit Union and the cost of letter head on forms was an issue. Following the merger profits at the Credit Union took a major hit. One year after the merger I recall attending a board planning meeting, we were asked given all the problems, if we could turn back the clock and stop the merger what would we do. No one present argued very hard that we should have proceeded with the merger. However in saying that, turning back the clock is not possible, 2000 was a very tough year and change is never easy. John Lahey who was CEO at this time explained to me that decisions are made based on what we know at any given time, these facts often change however it is not always possible to change the decision so we have to live with the decisions we make even if in retrospect with more information a different outcome would have prevailed. In retrospect, the merger was nineteen years ago. Since then the Credit Union has continued to grow and build the community, it was no doubt the right thing to do.
Our union and the Credit Union have worked on many community based projects, in 1962 when the Union built the Family Medical Clinic on Pelham Road, built the Retiree Village on Bunting Road, and built the new Union Hall on Bunting Road, the Credit Union helped finance these projects. Over the decades there have been countless members of our Union who have promoted and built the Credit Union, serving as directors on the board, on the finance committee as the CU rep on the shop floor or as an employee serving the members. Today Unifor represents FirstOntario Credit Union employees in the Niagara Region, and the credit union still has our accounts.
About 8 years ago we partnered up with FirstOnatrio to offer FREE pre retirement seminar for our members, since then over 1,500 members and their spouses have attended these invaluable courses which helped them transition from worker to retiree.
Credit Union’s across the county continue to embrace the seven basic principles co-operative principles, help to build and protect the community they operate in and offer innovative programs to the members they serve. Thinking back to 1949 when 25 workers signed the Credit Union Charter with the intention of helping their fellow worker attain financial security, I doubt they could have imagined how far their vision would travel or how many families they would help.
FirstOntario Credit Union has 126,000 members , branches in Hamilton and Niagara, has over 500 employees, approximately 200 are unionized, this is a rarity in the financial sector. The Credit Union also has two directors on the Board that are members of Local 199, quite an accomplishment considering the humble beginnings. FirstOntario Credit Union continues to offer competitive rates and innovative banking services to our members. The Credit Union also has two ATM’s at GM, as a member of the CU you don’t have to pay ATM transaction fees.
St. Catharines Autoworker Credit Union Limited
Founding Charter Names, 20th October 1949
Arthur J. McGarr, Operator
James Smith, Trade Union Organizer
Gordon Lambert, Core Maker
Watson Bricke,r Clemens Toolmaker
Lawrence Sweeny, Inspector
D.L. Mason, Set up man
William E. Baker, Machine Operator
Colin Parcher Tool Grinder
Douglas McBean,Machine Operator
Carl Schroder, Machine Operator
Charles Williamson, Assembly
John Cozier, Molder
Cleo McArthur, Assemblyman
Elwin D. Baldwin, Clerk
Allen MacDonald, Inspector
George Bennett, Core maker
C.W. Lane, Set up
R.E. Silverwood, Inspector
Charles Wadsworth, Machine Repairer
A.E. Schroder, Machine Operator
Samual Russo, Machine Setter
Leo Schekene, Machine Repair
C.J. Brooker, Machine Operator
W.M. Murphy, Toolmaker
F.G. Steeve Machine, Operator