Edward A. Filene

Edward Albert Filene (September 3, 1860 – September 26, 1937) was an American businessman and philanthropist. He is best known for building the Filene's department store chain and for his decisive role in pioneering credit unions across the United States.

Early life Born in Salem, Massachusetts, Edward was one of five children of William Filene (born May 8, 1830) and Clara Ballin (born December 13, 1833). Both his parents were German Jewish immigrants, his father from Posen, Prussia, and his mother was born in Segnitz, Bavaria. William immigrated to the US in 1848 after abandoning law school in Berlin. Reputedly Edward Bernays claimed that William was born with the surname "Katz" but upon entry changed it to a misspelling of "Feline", though more likely it was the toponymic "Filehne", the German name of Wieleń a town 90km from Posen. It was some time in the 1850s that William and Clara met while Clara was visiting relatives in Hartford, Connecticut. They married in New York City. As "a peddler, chiefly of women's apparel" William built up a company composed of several small retail shops. Most of the pupils in Segnitz were the sons of German and Austrian Jewish entrepreneurs or merchants like, for instance, Edwards classmate Richard Fluss, a childhood friend of Sigmund Freud.

By 1928 Edward was ousted from store management by his fellow stockholders who were "troubled by his liberal management policies", but retained an office and the title of President. His ouster allowed him to dedicate more time to his passions of travel, civic organizations, and philanthropy. He wrote numerous speeches, pamphlets and several books.

Filene's Store management policies

Edward Filene drew inspiration from the scientific management ideas of Frederick Winslow Taylor and adapted these ideas for use in the retail environment. While Taylor is best known for the use of scientific methods to increase workplace efficiency, he was also interested in how to improve the quality of work for employees. Filene is credited with refining a number of under-utilized and in some cases novel retailing techniques. For example, Filene's Department Store offered complete and honest descriptions of its merchandise and offered to give customers their "money back if not satisfied".

Edward Filene was a proponent of the scientific approach to retail management. In 1909, he introduced the "bargain basement" principle. Under this plan, merchandise had to be sold within 30 days or it was marked down; after a further 12 days, the merchandise was further reduced by 25% and if still unsold after another 18 days, a further markdown of 25% was applied. If the merchandise remained unsold after two months, it was given to charity. Although Filene's Basement was not the first 'bargain basement' in the U.S., the principles of 'automatic mark-downs' generated excitement and proved very profitable. Filene personally supervised construction of the first basement in Boston. An advocate of consumer education, he introduced color matching tools in the clothing departments of his stores.

Filene was a pioneer in employee relations. He instituted a profit sharing program, a minimum wage for women, a 40-hour work week, health clinics and paid vacations. He also played an important role in encouraging the Filene Cooperative Association, "perhaps the earliest American company union". Through this channel he engaged constructively with his employees in collective bargaining and arbitration processes.

He realized that credit unions could help ordinary American workers to access loans at reasonable rates. Equally important, workers could save their money so that when hard times hit, they were prepared.

Subsequent to this trip the philanthropy he practiced, combined with the steady implementation efforts of his associate Roy Bergengren were critical to the emergence of credit unions in the United States. He also donated $1 million to the Consumers Distribution Corporation to help them organize a national network of cooperative retail stores.

In 1908, Filene and Massachusetts banking commissioner Pierre Jay, helped organize public hearings on creating credit union legislation in Massachusetts. The Massachusetts Credit Union Act of 1909 was the first comprehensive credit union law in the United States, and would serve as a model for the Federal Credit Union Act of 1934.

Inspired by the experience in many European countries where credit unions were called "people's banks", Filene organized the National Association of Peoples Banks to advance the credit union cause in the US. However, little came of this until 1921, when Filene observed in Roy Bergengren the key organizer he needed. Together with Bergengren he founded the Credit Union National Extension Bureau.

In 1921, Edward A. Filene formed a savings and loan association for employees which later became the Filene Federal Credit Union of Boston, then merged with Webster First Federal Credit Union.

Filene seems to have been responsible, with the collaboration of Pierre Jay, for the adoption of the term "credit union" in the United States. His concern with fighting loan sharks and excessively costly consumer loans led to the choice of the word "credit", while his interest in working people made him want to cast unions in a more positive light.

Credit Union National Extension Bureau, 1921–1934

In 1921, Filene founded the Extension Bureau, to which he donated nearly $1 million during its 14-year history. It had four goals: to bring about the laws needed for credit union development in the various states, subsequently, to organize some credit unions in each state that could serve as examples to others, to expand the number of credit unions to the point that they could create self-sustaining state federations, and to combine the federations into a self-sustaining national association.

Filene hired Roy Bergengren, and their collaboration and the work of the Extension Bureau proved very effective, bringing state laws to fruition in 26 states and substantially revised flawed legal frameworks in 5 others. In 1934 the Roosevelt Administration passed the Federal Credit Union Act, making it possible to form a credit union anywhere in the United States.

The Extension Bureau has been a model for many projects related to international development and microfinance since. Foreshadowing debates that still rage, Filene's and Bergengren's views diverged on two key issues:

First, Bergengren believed that the Extension Bureau should attempt to secure federal legislation first, rather than work state by state. Filene maintained that a national law should be based on a sound understanding of the diverse circumstances of people across America—from shrimp fishermen in Louisiana, to factory workers in Massachusetts or farmers in the mid-West. Only by developing many state laws first would such a sound national understanding be possible. He prevailed in this debate.

Second, as the Great Depression set in the Reconstruction Finance Corporation under President Hoover sought to stimulate the economy with soft loans targeted to banks, railways and large companies. Filene favoured asking for $100 million in reconstruction credits to be pumped into credit unions. Bergengren strongly opposed this position, and his view prevailed this time. "To him, it meant destroying the vital principle of the whole movement by converting a community enterprise into an agency of the government. To teach people how to help themselves was more important by far in times of depression than at any other time."

Philanthropy

Filene's lifestyle and motivation for his philanthropic work was described by Bergengren, who knew him for much of his adult life.

An important initiative was the "Boston-1915", a multi-sector, private-public sector partnership that organized leaders and committees to take leadership roles in solving key urban problems, including slums, public health, crime and local governance.

His death was reported on the front page of every major newspaper in the world. A man who thought of himself as a "seller of pins" would have been honored indeed by the tribute paid to him by President Franklin D. Roosevelt when he heard of Filene's death Roosevelt wrote:

Roy Bergengren conducted a series of memorial meetings for credit unionists around the country. The Board of Directors of Credit Union National Association and CUNA Mutual Insurance Company voted to raise funds to build a memorial to their founder. Filene House in Madison, Wisconsin was the result. President Harry S. Truman dedicated the building in May 1950.

Legacy Filene is considered the father of the U.S. credit union movement, which by the end of 2024, with 142.3 million members, had the largest membership of any country and one of the highest levels of market penetration in the world.

A credit union think tank and research organization, the Filene Research Institute, is named in his honor. A building of the Hillman Housing Corporation, a housing cooperative on the Lower East Side of Manhattan, is named after him. Bronze busts honoring Filene and seven other industry magnates stand outside between the Chicago River and the Merchandise Mart in downtown Chicago, Illinois.

The first credit union to be named after Filene outside the United States was Filene Credit Union in Broad Cove, Nova Scotia in December 1932.

In 1931, Lincoln Steffens agreed to write a biography of Filene. He asked Whittaker Chambers to help him write it; when Chambers declined, he turned to Robert Cantwell. In December 1931, Cantwell accepted–and Steffens had a heart attack. In 1936, Steffens died with the book incomplete. In 1937, Cantwell gave the manuscript to Filene–and Filene died. The book went unpublished.

In 1944, the Liberty ship was built for the U.S. Maritime Commission by St. Johns River Shipbuilding Company in Jacksonville, Florida. Laid down on February 9, the ship was launched on April 6 in a christening ceremony sponsored by Catherine Filene Shouse that many in Florida's credit union business attended. In 1966, the decommissioned ship was sunk at Cook Inlet, Alaska, to be used as a breakwater and dock.

Publications 1906: The Betterment of the Conditions of Working Women, Annals of the American Academy of Political and Social Science 27: 613 to 23 via Internet Archive. 1915: Cooperative Pioneering and Guaranteeing in Foreign Trade, Annals of the American Academy of Political and Social Science 59: 321 to 32 via Internet Archive. 1917: Democratic organization of the coming peace conference, Annals of the American Academy of Political and Social Science via Internet Archive 1919: International Business Coöperation, Annals of the American Academy of Political and Social Science 89: 135 to 42, via Internet Archive 1920: The World Mix-up and the Way Out, Annals of the American Academy of Political and Social Science 92: 26–34. 19??: The winning plans of the European peace awards: offered in Great Britain, France, Italy, and Germany for "The best practical proposals for restoring peace and prosperity in each of those countries thru international co-operation". Rouffé, imp., 180 pages, digitized Sep 15, 2010. 1921: "Work Or War?", 23 pages. 19??: "The War's Influence Upon American Business", publisher not identified, 15 pages. 192?: "An American View: Prosperous Neighbors Swell the Nation's Pocketbooks", Wm. Filene's Sons Company, 4 pages. 1922: Is American Coöperation Necessary for European Rehabilitation, Annals of the American Academy of Political and Social Science 102: 183–9, via Internet Archive. 1924: The Way Out: A Forecast of Coming Changes in American Business and Industry., Doubleday, Page, 306 pages, via Internet Archive 1925: The Way Out. A Business Man Looks at the World, London, 248 pages. 1927: "The Way Out for the Manufacturer and the Merchant": An Address. published by Marlborough Chamber of Commerce, 18 pages. 1925: "More Profits from Merchandising: The Model Stock Plan for Distributors, Producers, and Buyers", An Address Before the Retailers Lucheon, Illinois Chamber of Commerce, at Chicago, Thursday, October 18, 1928. self-published, 11 pages. 1928: "The New Responsibilities of the Buyer", 14 pages. 1928: "Contributions of Research to Business": An Address Delivered Before the Sixty-ninth Convocation of the University of the State of New York at Albany, Friday, October 19, 1928, 14 pages. 1929: "Mass Production and the Tariff", 7 pages. 1930: The Model Stock Plan, McGraw-Hill, New York, pp 253, reissued by Literary Licensing, LLC, 270 pages.(March 23, 2013) 1931: Successful Living in This Machine Age. published by Jonathan Cape Toronto. reissued by Lewis Press 348 pages, via Internet Archive 1934: The Consumer's Dollar. New York, John Day Company 29 pages, ASIN: B00086S6P. 1934: "A Merchant Surveys the New Deal: Radio Address", 8 pages. 1934: "Department Store-manufactures's Relationships", Issue 3 of Marketing series, American Management Association, Kraus Reprint Corporation, 16 pages. 1934: "The New Deal and the Old Ideal", reprint, 2 pages. 1935: Morals in Business. published by the Committee On the Barbara Weinstock Lecture, via Internet Archive 1936: Cooperation, a Natural Human Law, reprinted by American Red Cross, 3 pages. 1936: Religion and Distribution, an Address ...(at the Dinner of the Synod of New York of the Presbyterian Church of the U.S.A., Brooklyn, New York, October 21, 1936). reprint, publisher not identified, 5 pages. 1937: (with Werner Karl Gabler & Percy Shiras Brown) Next Steps Forward in Retailing, Harper & Bros 1939: Speaking of Change: A Selection of Speeches and Articles via Internet Archive

French language 1925: Le problème européen et sa solution Bibliothèque politique et economique, Translated by Francis Delaisi. Payot, 159 pages. 1934: "Servir, au siècle des machines", Volume 1 of Encyclopédia Pax ... 2. collection: Coopération sociale. 1.ser. Philosophie et pratique Volume 2 of Encyclopédie Pax. Les Éditions internationales, 291 pages.

German language 1927: Mehr Rentabilität im Einzelhandel: (Der Normal-Lagerplan), "L." Schottlaender & Company, 171 pages. 1931: Reichtum für alle: der neue Kapitalismus, Braumüller, 89 pages.