Our History, Black History: Freedman's Bank

There is an adage that states, “You never know where you are going unless you know where you have been.” In the spirit of Black history month, the Monroe Dispatch will highlight stories and the history of Blacks that are not commonly known. The end of the civil war between the Union and the Confederacy brought newfound opportunities for Blacks in America. The Emancipation Proclamation signed by President Abraham Lincoln in 1863 signaled Blacks in the U.S. were no longer required to work for free as enslaved people. Although enslaved people were freed in 1865, many did not receive notice of their emancipation and were not released from plantations until June 19, 1865, now celebrated as the Juneteenth holiday for Blacks. Some plantation owners in parts of Georgia and South Carolina had fled from their plantations during the war, leaving unkempt land, which was eventually up for grabs for formerly enslaved people who had migrated to the southeastern parts of the U.S. following the union army. Freed Blacks began farming their own land, and the U.S. government leaders took notice that newly freed people could use structure to be acclimated into what was the traditional society of the country. U.S. leaders took note that with freedom came changes to the U.S. economy, especially for some Blacks now making wages for the first time. In 1865 US Congress chartered the Freedmen's Savings and Trust Company (also known as the Freedmen's Bank) specifically with the intention of collecting deposits from the newly emancipated population. The bank was advertised to Blacks through the Freedmen's Bureau and leaders of the Black community as a way to acclimate into the U.S. as true citizens of the country. Soon former Black Union soldiers and Blacks who began earning wages as sharecroppers, barbers, cooks, carpenters, and many other trades started depositing money into Freedmen's Bank. Depositors also included Blacks who were free before emancipation, including Black physicians and nurses. By 1871, 37 branches were open across 17 states. About 100,000 people and entities opened an account with the bank worth more than $57 million during that time.

The Panic of 1873 caused a financial crisis in the U.S. It also revealed mismanagement of funds from Freedman's Bank by its then leader Henry Cook, who made unauthorized investments and loans to White counterparts with the money he was in charge of managing. By 1874 Frederick Douglas was appointed to replace Cook and work to save the bank from collapse, but it was already too late. All the money many Blacks had deposited was wiped away. It is documented that few Blacks who held their money in Freedmen's Bank received one-third of their money back, but the majority received nothing. This was a massive loss of Black wealth and signaled the beginning of mistrust between Blacks and government institutions. Shortly after the devastating blow of Freedmen's Bank, the U.S. government divested some of its efforts in the southern part of the states, and power was relinquished back to the hands of confederacy leaders who transformed the south again, creating suppression intended to cause a regression of Black progress. In his book, Souls of Black Folk, W.E.B. Dubois wrote, “Not even ten additional years of slavery could have done so much to throttle the thrift of the freedmen as the mismanagement and bankruptcy of the series of savings banks chartered by the Nation for their especial aid.”