Bond of association

The (common) bond of association or common bond is the social connection among the members of credit unions and co-operative banks. Common bonds substitute for collateral in the early stages of financial system development. Like solidarity lending, the common bond has since played an important role in facilitating the development of microfinance for poor people.

In modern financial systems, common bonds remain a key building block, especially for the strategic networks that underpin many of Europe’s co-operative banks.^[1]

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So here we are given the heat of reaction, and we are given some bond dissociation energies and we want to determine the bond dissociation energy for our fluorine-fluorine bond. So we can look at this. Lets write the reaction to determine, which bonds we break and which bonds we form. So lets look at the bonds we break and form, and methane we break, 4 C-H bonds. Fluorine we break 2, since there are 2 fluorine molecules, 2 Fluorine-fluorine. CF4 we form, 4 C-F bonds, and then H2 we form 2, since there are two hydrogen molecules, each as an H-H bond. So we form 2 H-H bonds. So this means we can look at the energies to break a C-H bond is 410 . So we have to put in that much energy. So that is 4 times 410. To break a fluorine-fluorine we do not know. Lets call that 2x. X is the bond dissociation. As for fluorine. We are going to form 4 C-F bonds. So we form it, it is exothermic. So that is minus, and we are going to form 2 H-H bonds. The same thing it is exothermic. These are all kJ. So if we add these numbers together it is equal to minus 716 kJ. So we are going to add these four numbers together. We do that we get -1,032+2x. That is all equal to -716 kJ. Which means x is equal to 158 kJ. So this is the bond dissociation energy for Fluorine.

How bonds work

Hermann Schulze-Delitzsch, an early co-operative organizer, explained the concept of the ‘bond of association’ at credit union meetings in this way:

... your own selves and character must create your credit, and your collective liability will require you to choose your associates carefully, and to insist that they maintain regular, sober and industrious habits, making them worthy of credit.^[2]

In his book People’s Banks (1910), Henry W. Wolff summarized the character of this ‘common bond’ based on his observations of credit unions all over Europe:^[3]

many individuals bring small amounts of share capital into a common pool, which collectively amounts to significant base of collateral,
borrowers, lenders and guarantors live near one another (e.g., in the same village), making it convenient for the lender and guarantors to monitor the performance of the borrower, and manage any problems that may come up,
an ‘inter-connection of liability among members’ is created by the bond, which may either involve direct and unlimited ‘financial liability’, or ‘direct responsibility for good management’ (which once publicly established increases the sense of security of claim-holders), and
all operations of the credit union must be conducted along ‘businesslike lines’ based on a strong sense of collective responsibility.

Diverse types of bonds

There are several distinct types of bonds, corresponding to distinctive types of credit unions. For example:

The Raiffeisen banks in Germany relied on parish-based bonds, as parishes were very small and people were in constant communication with each other through the central nexus of the local church. Similarly, the Caisses populaires of Quebec were originally "organized along the boundaries of Roman Catholic parishes".^[4]
The bonds on the multi-ethnic Canadian Prairies were community-based, linking members through their common residency in small towns and villages.
Common bonds in early United States credit unions were generally employee-based, and concentrated in the manufacturing and transportation industries, and among soldiers, teachers and postal workers.^[5]
The bonds of many credit unions in Kenya are based on out-growers – farmers who deliver tea, sugar and other cash-crops under contract to a company that handles marketing and sales.^[6]

Debate between Schulze-Delitzsch and Raiffeisen

A bitter debate between two German credit union pioneers over the nature of bonds of association eventually ended in a tie, with Schulze-Delitzsch’s approach dominating in urban settings, and Raiffeisen’s dominating in rural ones.

The bond of association for Schulze-Delitzsche’s larger, more urban ‘people’s banks’ required all members to contribute substantial share capital. He advocated that the banks should receive the protection of limited liability.

Friedrich Wilhelm Raiffeisen strongly opposed any share capital requirement. Arguing that most farmers had too little cash to afford share capital, he maintained that the principle of unlimited joint liability was "indispensable in small districts". Instead, it was needed "in order to prevent the Unions from excess, since it makes the administrative bodies conscious of their moral and material responsibilities."^[7]

References

^ Martin Desrochers, Klaus P. Fischer & Jean-Pierre Gueyie. Managing contractual risk through organization: strategic vs. consensual networks. Développement International Desjardins, Levis, Quebec, May 2004.
^ J. Carroll Moody & Gilbert C. Fite. The Credit Union Movement: Origins and Development 1850-1980. Kendall/Hunt Publishing Company, Dubuque, Iowa, 1984, p. 4
^ Henry W. Wolff. People's Banks: A Record of Social and Economic Success. P.S. King & Son, London, 1910, pp. 37-38
^ "Canada's Credit Unions and Caisses Populaires". Department of Finance (Canada). February 2000. Archived from the original on 2009-03-04. Retrieved 2009-10-15.{{cite web}}: CS1 maint: bot: original URL status unknown (link)
^ Ian MacPherson. Hands Around the Globe: A History of the International Credit Union Movement and the Role and Development of World Council of Credit Unions, Inc. Horsdal & Schubart Publishers & WOCCU, Victoria, Canada 1999, p. 23
^ Graham Owen. Rural outreach and financial cooperatives: SACCOs in Kenya. World Bank (Agriculture and Rural Development), Washington, 2007.
^ Friedrich Wilhelm Raiffeisen. The Credit Unions. Fifth (1887) edition, translated from the German by Konrad Engelmann. Raiffeisen Printing & Publishing Company, Neuwied on the Rhine, Germany, 1970, p. 46.

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