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Beyond the Collapse:

Our Black American history is ladened with much and often never discussed important history in schools. Until recently, we are beginning to see Black filmmakers resurrect hidden stories such as The Porter, to bring attention to a segment of the Black experience to modern viewership. After researching the history of the Freedman’s Bank, I believe this is a story not only to put into print but also to be developed on the silver screen.
The official name of the Freedman’s Bank was the Freedman’s Savings and Trust Company, a nonprofit organization. Its purpose was to benefit the Black community by receiving the monetary deposits of freedmen and women from slavery. Those same deposits were used to invest in government securities and any profit earned was returned to the depositors as interest. With that purpose, the Freedman’s Bank was incorporated by Congress on March 3, 1865, after the Civil War.
Freedman’s Bank took over military banks created to provide Black troops with depository services. However, the Bank had a short-lived existence surrounded by scandal, distrust, and misinformation.
John W. Alvord was the superintendent of schools and finances for the federal Freedmen’s Bureau and was a key figure in establishing the bank and organizing its original founders, white people in business, philanthropists, and humanitarians. Because the Freedmen’s Bureau was a federally backed institution, there was a belief within the Black community that the federal government protected their deposits. The founders never corrected that belief when, in fact, the Freedman’s Bank was a private corporation. Compounding this belief was compounded by observations that many of the Bank’s trustees were appointed Freedmen’s Bureau officers. Given what the community believed, the Bank’s trustees could market the bank in a way that reinforced public sentiment related to the Bank having the federal government back and securing the solvency of the deposits.
To make matters worse, the bank’s all-white trustees controlled the bank and operated from the national headquarters in New York City and later in Washington, D.C. To secure a faulty trust within the community, the trustees hired local Black leaders—politicians, ministers, and businessmen—as cashiers and members of the “advisory board.”
Upon receiving its government charter and endorsement from the Freedmen’s Bureau commissioner, by 1874, 72,000 Black Americans were able to deposit over $3,000,000 in 34 branch offices in every southern state, Washington, D.C., Philadelphia, and New York City.
The chairman of the finance committee, Henry Cooke, overly invested in real estate in Washington D.C. with several unsecured loans in which family members were the recipients of these funds—such as his brother Jay Cooke and Company, who was also his business partner—to finance the Northern Pacific Railroad. The overextensions of these loans left the Bank vulnerable because of financial malfeasance. Given the implications of these actions, there was a national financial crisis that crippled the Bank, whereby there was a sacrifice of the best securities and the allowance to borrow money at catastrophic rates to remain solvent.
Compounding this issue, there was an amendment to the Bank’s charter in 1870 whereby most of the bank’s investments were to go to white businesses, while Black customers had to meet collateral requirements and other stringent requirements. Hence, what was supposed to be a means of supporting economic growth in the Black community only became a faint dream and the Bank never stimulated Black businesses.
In 1873, at the beginning of the nationwide Financial Panic, most of the white trustees resigned, leaving the Black trustees to manage the Bank. In 1874, the active Black trustees were Charles Purvis, John Mercer Langston, and A. T. Augusta. Frederick Douglass was installed as president to help restore the confidence of depositors. However, Douglass found hardship in turning around a bank that experienced years of mismanagement, careless and discriminatory lending, incompetent bank officials, and a national economic crisis.

In 1874, the trustees persuaded Congress to amend the charter whereby money would be returned to the branch offices for investment; however, its passage came too late for implementation. By 1883, less than a quarter of the depositors received 62% of their original deposits. The bank eventually collapsed; the Black depositors and general community shouldered a legacy of suspicion and distrust in the banking system. For the newly freed slaves, it became a deepened loss to achieving economic security, equal citizenship, and an avenue to establish generational wealth.
As of 2024, there has been a change in the tide, as there are over 40 Black-owned banks in the United States. Their goal is to purposely serve Black American communities and improve their customer’s wealth. These banks operate in brick-and-mortar and online settings, making them accessible for many customers.

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