Also known as the Freedman’s Savings and Trust Company, the Freedman’s Savings Bank was chartered as a private corporation in March 1865. The bank was the first financial institution specifically meant for the savings of recently emancipated African Americans. The mutual savings bank was undertaken with a dual mission of providing financial stability for freedpeople and inculcating the middle-class habits needed for them to succeed in a system of free labor. As such, many prominent African Americans and their supporters in Congress welcomed the bank and its educative agenda. Henry Wilson, vice president of the United States under Ulysses S. Grant, remarked enthusiastically that the hard-earned dollars of freed people were “just as safe there as if it were in the Treasury of the United States.” Headquartered in Washington, D. C., the Freedman’s Savings Bank opened 37 branches throughout the
South. Each office employed African-American tellers and appointed leaders of the local community to the advisory boards of the various branches. The bank worked hand in hand with other respected black institutions, such as the Freedmen’s Bureau and churches, to encourage customers to use its services. Newspaper advertisements often prominently featured Abraham Lincoln in the background, giving the distinct impression of government endorsement. John W. Alvord, president of the bank, presided over a conservative institution that received depositors’ money and invested in government securities but did not make any loans. This sensible policy won the respect and the business of 100,000 customers and assets of $4 million. Deposits ranged anywhere from a few pennies to around $50, but all were welcomed. In addition to individual deposits, many African-American organizations eagerly put their treasuries into the bank.
In 1870 Congress amended the bank’s charter to allow speculative investments and loans. Unfortunately, a combination of bad investments, corrupt practices, and the effects of the panic of 1873 led to financial insolvency. In 1875 the Freedman’s Savings Bank closed its doors forever. Attempts made by friends of the bank failed to secure full financial restitution to investors. “I pray you to consider us old People,” wrote one former customer, “our best life spent in Slavery. . . . Just asking for what we worked for.” The failure of the Freedman’s Bank, and the inability of former slaves to regain their deposits, explained why many African Americans distrusted financial institutions for decades afterwards.
See also Reconstruction.
Further reading: Carl R. Osthaus, Freedmen, Philanthropy, and Fraud: A History of the Freedman's Saving Bank (Urbana: University of Illinois Press, 1976).
World History
