By Robert Stitt
In 1865, Congress established the Freedman’s Savings and Trust Co. with the purpose of helping former slaves build wealth. The bank closed in 1874 even though over 100,000 black Americans had deposited over $57 million in the Washington D.C. headquarters and the 37 city branches that spanned 17 states in just 10 years.
According to Black Enterprise, the bank started strong, but a number of bad investments, financial mismanagement, and the expense of building a new headquarters building in Washington, D.C. wiped out its assets. Even large contributors like Fredrick Douglas, who tried to keep it afloat, were unable to salvage the doomed institution. It wasn’t that anybody else in the nation was doing much better, however. This was the start of the first great depression, known as the Panic of 1873. In fact, 18,000 United States businesses were lost in just two years.
While the bank’s mission was “to promote economic integration and financial inclusion”, it served as just one more way to strip wealth out of black America. When the bank closed its doors “Its failure left ‘tens of thousands of depositors’ destitute and in financial ruin,” according to a C-SPAN report.
Black Enterprise notes that Congress did fund another plan to give up to 62 percent of the deposits back to bank members, but most people never saw any of that money.
Even though the bank did not make it, its place in American history is important. On the 150th anniversary of the Freedman’s Savings and Trust Co., the Treasury Annex building in Washington, D.C., was renamed “The Freedman’s Bank Building”. It’s fitting, since the annex sits on the very spot that the original bank once rested.
U.S. Treasury Secretary Jacob Lew said, “Naming the Freedman’s Bank Building recognizes an institution that symbolized a new future for African Americans. The legacy of Freedman’s Bank also serves as a reminder that we must continue striving for greater financial inclusion for all Americans–particularly those in underserved and minority communities—so that they can share in the benefits of our growing economy.”
One may wonder what would happen if somebody could find an old savings certificate and show that they never received their 62 percent. How much would that be worth today, with interest, or would Congress even honor it? Time to start digging through those old trunks in the attic!