"Chartered by Congress in 1865 in the District of Columbia , the Freedman's Savings Bank was founded with the express purpose of 'encouraging thrift among newly-emancipated Negroes.' The Richmond branch, one of many throughout the urban South, opened in mid-October 1865. The first deposits were from discharged soldiers, and many were accompanied by messages left for family members such as instructions with accounts designating kin who could have access to the money in time of need. Each branch had a northern white cashier and an advisory board of African Americans...
"Heroic efforts were made to attract depositors to the bank. Leaders of churches and societies emphasized the idea of savings as the road to real freedom, and every little bit that individuals and groups could gather was solicited for deposit to Freedman's. With this sort of backing, it is not surprising that the bank's assets grew steadily. By the end of 1872, the Richmond branch had $162,000 in 3,400 accounts. Unfortunately, the money was not used for African American community development at the local level but was sent back to Washington, D.C.. The original stricture that the banks investments be confined to government securities was lifted in 1870; and investments in wildcat stocks, mortgages on worthless property, and unsecured loans to whites, quickly drove the bank under. A last-ditch effort to save Freedman's was made by putting Frederick Douglass in charge, but there was nothing he could do. The bank closed in 1874, having betrayed the aspirations of a people in the most scandalous way.
"If Freedman's depositors were able to salvage anything, and most did not even know how to make claims, it was a small proportion of their accounts. Because many had mistakenly believed the bank's safety was guaranteed in some way by the government, they were doubly disillusioned. Efforts went on for years to get compensation from Congress, but none was ever forthcoming. Though Freedman's was not a black bank in terms of management, the two major messages the African American community absorbed was that to aggregate black funds was to become vulnerable and to trust any leader urging them to deposit their money with a particular bank was dangerous. The vast majority, if they trusted banks at all, later kept their money in white banks even when there were alternatives. In addition to the financial loss, it would be hard to exaggerate the psychological impact of the bank's failure on Richmond's blacks, particularly because the community's leaders were the ones who had been instrumental in aggressively recommending it. As one commentator noted, 'It served as a great setback for Negro financial energy.' [Maggie Lena] Walker at the time was in grade school, and neither she nor her parents had accounts at the bank, but St. Luke councils did, as did her future husband and his siblings."
P.xxix-xxx, "Introduction," A RIGHT WORTHY GRAND MISSION: MAGGIE LENA WALKER AND THE QUEST FOR BLACK ECONOMIC EMPOWERMENT by Gertrude Woodruff Marlowe (Howard U. Press, DC: 2003)
Saturday, February 21, 2015
FREEDMAN'S BANK FINANCIAL BETRAYAL
"Chartered by Congress in 1865 in the District of Columbia , the Freedman's Savings Bank was founded with the express purpose of 'encouraging thrift among newly-emancipated Negroes.' The Richmond branch, one of many throughout the urban South, opened in mid-October 1865. The first deposits were from discharged soldiers, and many were accompanied by messages left for family members such as instructions with accounts designating kin who could have access to the money in time of need. Each branch had a northern white cashier and an advisory board of African Americans...
"Heroic efforts were made to attract depositors to the bank. Leaders of churches and societies emphasized the idea of savings as the road to real freedom, and every little bit that individuals and groups could gather was solicited for deposit to Freedman's. With this sort of backing, it is not surprising that the bank's assets grew steadily. By the end of 1872, the Richmond branch had $162,000 in 3,400 accounts. Unfortunately, the money was not used for African American community development at the local level but was sent back to Washington, D.C.. The original stricture that the banks investments be confined to government securities was lifted in 1870; and investments in wildcat stocks, mortgages on worthless property, and unsecured loans to whites, quickly drove the bank under. A last-ditch effort to save Freedman's was made by putting Frederick Douglass in charge, but there was nothing he could do. The bank closed in 1874, having betrayed the aspirations of a people in the most scandalous way.
"If Freedman's depositors were able to salvage anything, and most did not even know how to make claims, it was a small proportion of their accounts. Because many had mistakenly believed the bank's safety was guaranteed in some way by the government, they were doubly disillusioned. Efforts went on for years to get compensation from Congress, but none was ever forthcoming. Though Freedman's was not a black bank in terms of management, the two major messages the African American community absorbed was that to aggregate black funds was to become vulnerable and to trust any leader urging them to deposit their money with a particular bank was dangerous. The vast majority, if they trusted banks at all, later kept their money in white banks even when there were alternatives. In addition to the financial loss, it would be hard to exaggerate the psychological impact of the bank's failure on Richmond's blacks, particularly because the community's leaders were the ones who had been instrumental in aggressively recommending it. As one commentator noted, 'It served as a great setback for Negro financial energy.' [Maggie Lena] Walker at the time was in grade school, and neither she nor her parents had accounts at the bank, but St. Luke councils did, as did her future husband and his siblings."
P.xxix-xxx, "Introduction," A RIGHT WORTHY GRAND MISSION: MAGGIE LENA WALKER AND THE QUEST FOR BLACK ECONOMIC EMPOWERMENT by Gertrude Woodruff Marlowe (Howard U. Press, DC: 2003)