“To understand Black banking and economics today, we’ve got to know some history.”
Have you ever heard of the Freedman’s Bank? I’ve heard of the Freedmen’s Bureau, which was established after the Civil War to help assist the newly freed slaves in receiving food and shelter.
Well, the Freedman’s Bank was established March 3, 1865, to help Black people in our economic growth and development post-slavery. As well as signing the Emancipation Proclamation, a month before his assassination President Abraham Lincoln also signed the Freedman’s Bank Act.
“The story of the Freedman’s Bank reveals the important foresight Lincoln had in seeing a connection between the political freedom of black Americans and their financial security (PRI).”
The National Archives and Records Administration report that during its ten-year period, the bank served some 70,000 people and received deposits of around $50,000,000 (in today’s dollar).
“The Freedman’s Savings and Trust Company (Freedman’s Bank), was established as a private corporation by an act of Congress on March 3, 1865. The bank operated primarily for the benefit of former slaves and their families, investing deposits in stocks, bonds, Treasury notes, and other securities. A board of 50 trustees managed the Freedman’s Bank, which grew by 1871 to include 37 branches in 17 states and the District of Columbia (Archives.gov).”
There is always a lot of conversation around the wealth disparities between white and Black America. It is important that we understand the history that has been the foundation for much of the contrast that we see today in these communities.
“By 1871, Congress had authorized the bank to provide mortgages and business loans. Such mortgages and loans, however, were usually given to whites, creating a financial paradox — a bank using the savings and income of black depositors to advance the economic fortunes of whites who had at their disposal mainstream banks that excluded blacks.
Soon reports and rumors of corruption within the bank’s white management threatened the bank’s existence. In response, the bank’s management was replaced with a variety of black elites, most notably Frederick Douglass, who was appointed to head the bank in March 1874.”
The bank still closed in 1874 and although some of the funds were returned, Black America still suffered a major loss.
The story of the Freedman’s Bank is important because it illustrates how Black America continued to be taken advantage of and driven into an economic disadvantage after slavery ended.
“Then in one sad day came the crash — all the hard-earned dollars of the freedmen disappeared; but that was the least of the loss — all the faith in saving went too, and much of the faith in men; and that was a loss that a Nation which to-day sneers at Negro shiftlessness has never yet made good.”-W.E.B Dubois