The following article originally appeared on Facebook on the 150th anniversary of the founding of the Freedman's Bank.
“The closure of Freedman’s Bank devastated the African American community. An idea that began as a well-meaning experiment in philanthropy had turned into an economic nightmare for tens of thousands African Americans who had entrusted their hard-earned money to the bank.” Reginald Washington, former archivist at the National Archives.
The founding of the Freedman’s Bank was spearheaded by John W.
Alvord, a Congregationalist minister and abolitionist, who served as a chaplain accompanying Gen.William Tecumseh Sherman’s troops. Alvord observed the destitute conditions of the former slaves and also noted a pressing need for greater financial literacy and some type of savings bank to serve the black soldiers of the U.S. Colored Troops.
The founding trustees succeeded in getting a charter for incorporation approved by Congress and signed into law by President Abraham Lincoln on March 3, 1865. Ultimately, 37 branches of the Freedman’s Bank were established in 17 states and the District of Columbia.
Initially, the Freedman’s Bank appears to have started off as a benevolent institution staffed by officials and trustees who were sincerely interested in promoting financial “upliftment” to the formerly enslaved population.
But mismanagement and corruption among some of the bank’s managing officials mixed with a broader, national economic recession, resulted in the failure of the Freedman’s Bank.
Although the Freedman’s Bank had officially received its charter from Congress, Congress had not established any Federal responsibility for the solvency of the institution. And most of the African American depositors were not aware that the Freedman’s Bank was not an official agency or arm of the Federal Government.
While half of the depositors of the Freedman’s Bank eventually received some compensation, others received nothing. Some, including these depositors, tried unsuccessfully in 1880 to petition Congress for reimbursement. (Image: National Archives,Records of the U.S. House of Representatives, RG 233)
You can read the full story of the Freedman's Bank here:
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