National Archives at College Park
Portrait of Henry D. Cooke, circa 1860 – 1865. In May 1870, the Freedman’ s Bank’ s predominantly white trustees, led by Cooke, successfully lobbied Congress to alter the bank’ s fundamental mission.
assessment. He concluded,“ I assure you that there isn’ t the slightest chance in the world of your receiving any further funds from this deposit.”
White Americans used the bank’ s failure to fuel stereotypes about Black people’ s laziness and their lack of fitness for the responsibility of political and economic inclusion. White Democrats and Republicans alike dared to argue that Black people were ill-prepared for the privileges of freedom. This was why, they contended, the bank failed. As one of the bank’ s commissioners told a depositor after the bank’ s collapse, it was Black people’ s fault for entrusting bankers with their money. These types of criticisms continued to infiltrate public discussions of African Americans, especially in the postwar South. Even Frederick Douglass sought to rebut the claim of Black financial ignorance and misguidedness.“ The failure of that institution,” he clarified,“ was not due to the ignorance and incompetency of colored men, but to the shrewdness and rascality of white men.” Despite the bank’ s temporary success, white Americans blamed African Americans for the bank’ s tragic demise.
In the longer term, African Americans were pushed out of the financial marketplace. In the late 19th and early 20th centuries, without large banks to serve their needs, African Americans created financial institutions of their own. Left behind by traditional banks, Black communities around the nation, from Richmond, Virginia, to Durham, North Carolina, and
Tulsa, Oklahoma, invested in their own communities through establishing a variety of types of institutions to suit their specific economic needs. They created joint stock companies, their own banks and Black economic enclaves. The Capital Savings Bank in Washington, DC, incorporated in October 1888, and the True Reformers Bank founded in Richmond, Virginia, which began operations in April 1889, serve as examples. Despite the continued threat of racial and economic violence, African Americans were compelled to create avenues through which to combat the ever-increasing reality of economic exclusion.
The history of the Freedman’ s Bank shows that America’ s racial wealth gap started with slavery and continued during Reconstruction, the era that was supposed to inaugurate freedom for African Americans. America’ s banks have historically both ignored and exploited Black communities. Only when financial institutions, supported by the federal government, believed that they could profit from African Americans’ desire to build wealth did they extend financial services to them. But if redlining, predatory inclusion and the subprime mortgage crisis of the early 2000s have proved anything, it’ s that America’ s banking industry has preyed on populations of people least likely to have the economic or political power to fight back.
The Freedman’ s Bank was created to symbolize the highest ideals of American capitalism and the democratic promise of freedom during the second founding. For freed people, however, the bank came to represent a new form of exploitation. The connections among the bank’ s rise, collapse and continued influence on Black communities have been buried.
Justene Hill Edwards is an associate professor of history at the University of Virginia. She is the author of Unfree Markets: The Slaves’ Economy and the Rise of Capitalism in South Carolina. This article has been excerpted from Savings and Trust: The Rise and Betrayal of the Freedman’ s Bank. Copyright © 2024 by Justene Hill Edwards. Used with permission of the publisher, W. W. Norton & Company, Inc. All rights reserved.
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