The Freedman's Bank Forum Obscures the Institution's Real HistoryRoundup
tags: Reconstruction, African American history, emancipation, banking, credit, Freedmans Bank
Justene Hill Edwards is an associate professor of history at the University of Virginia. A 2022 Andrew Carnegie Fellow, she is the author of Unfree Markets: The Slaves’ Economy and the Rise of Capitalism in South Carolina (Columbia University Press, 2021).
On Oct. 4, the Treasury Department hosted its seventh annual Freedman’s Bank Forum, an event designed to highlight racial and economic inequality in America and outline possible policy solutions. Key speakers included Vice President Harris and Treasury Secretary Janet L. Yellen. Named in honor of the Freedman’s Savings and Trust Co. — also known as the Freedman’s Bank — founded in 1865 for Black Americans recently freed from slavery, speakers at the forum discussed well-intentioned policy goals.
Specifically, Harris celebrated the Economic Opportunity Coalition (EOC), a partnership between the federal government, financial institutions and philanthropic organizations. The EOC was created in July 2022 to funnel capital into communities that have been historically underserved by the financial services industry.
The forum invokes the legacy of the Freedman’s Bank to highlight the historical injustices committed against communities that have been economically exploited and ignored. Moreover, Harris remarked that the bank’s mission was guided by the notion that all Americans should “have access to the financial resources they need to succeed, to thrive, and to determine their own future.”
It’s true that the Freedman’s Bank represented African Americans’ economic ambitions, but the forum paints an inaccurate picture of its historical legacy. The real history of the bank offers a more sober perspective on the plight of African Americans after the end of slavery in 1865. Understanding the bank’s rise and fall exposes the challenge of public-private partnerships to solve racial and economic inequality in America.
The Freedman’s Bank was established by White abolitionists, bankers and philanthropists on March 3, 1865. The bank’s charter specified that it would receive deposits “on behalf of persons heretofore held in slavery in the United States.” The Freedman’s Bank was not unlike other savings banks in America during the 19th century. It was guided by a board of trustees, men with political and economic influence, who were chosen to be good stewards of the bank’s finances. It also had a benevolent mission: to encourage habits of hard work and frugality among its depositors.
The Freedman’s Bank administrators believed that freed African Americans needed help learning how to earn and save money. “Don’t waste money; save the small sums” was the bank’s maxim as agents traveled around the South in the late 1860s encouraging African Americans to open bank accounts. Depositors received biannual interest payments to encourage them to save as much money as they could.
Yet African Americans in 19th-century America knew how to save money. For example, Black soldiers who enlisted in the United States Colored Troop regiments had been earning wages for their service since they were allowed to enlist in July 1862. They successfully fought to receive pay equal to their White counterparts, something that was granted in June 1864. This move increased the need for Black soldiers to have access to a bank of their own.