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THE FREEDMAN'S BANK ROBBERY
ESTABLISHMENT
The Freedman's Savings and Trust aka The Freedman's Bank was a federal government institution organized in 1865 after the Civil War.It was designed to encourag and guide the economic developmet of the newly emancipated Afrikan slaves during the post Civil War period.
Following the end of the Civil War the poor economic condition fo the newly emancipated Afrikan American (often called Freedmen at the time) was aggravated by the ecomomic devastation of the Southern states. The emancipated peoples had few wconomic resources or capital and little experience or exposure to private enterprise. Many soon fell into share- cropping and forced labor in the South. To help alleviate the socio-economic condition of the community, the Republican-controlled US Congress established the Freedman's Bureau and passed an act of incorporation and a charter for the Freedman's Savings and Trust Company in New York City, the first branch of the company opened in Baltimore, Maryland. By 1866 the bank had established 19 branches in 12 states, mainly in the South. The national headquarters was shifted to Washington, DC in 1867.
FUNCTION
The company was created as repository for the Afrikan-American veteran's, ex-slaves and their families to build their savings, but it also enabled numerous community organizations to increase their financial strength and thus, expanded their activities. The company attracted a large number of societies, churches, charities, and other private organizations that opened accounts and established trusts w/ the company. With the assistance of the company, numerous hospitals, schools and institutions such as the St. Elizabeth Home for Colored Children and the Francis Xavier's Orphan Aid Society were established. Noted community leaders and the civil rights activists formed the management of several trusts and held other importnat positions in the bank. A large number of Afrikan-American soldiers and veterans of the Civil War held savings accounts in the banks, the management of theirfunds was organized through an allotment system supervised by the officers of the respective army regiments. The surviving documentation and papers of the bank archives illuminate the names whereabouts and the other relevant information about the veterans of the 7th regimentUnited States Colored Troops and their transactions with the bank; the data is considered historically important in the study of Afrikan American history.The banks records of the 480,000 names, estimated to be the largest single repository of lineage-linked Afrikan American records, has been indexed by the Church of Jesus Christ of the Latter-day Saints. The search database is available to amateur as wellas as professional genealogists.
FAILURE
For several years, the company reamined stable and operated well. But in 1870 the company's new management encourged the US Congress to change the policy requiring that all deposits be invested only in government securities. (This event alone marked the beginning of the end of the Freedman's Bank). As a result the bank's management began to make more speculative and riskier investments in the stock market and real estate. Poor mangement (by incompetent and/or corrupt personnel) speculation, dubious investments and corruption soon overwhelmed the bank, substantially increasing its debt while its assts shrank. In the midst of the crisis, leading Afrikan American politician Frederick Douglass joined the bank as the president in 1874 to "boost the morale" of the organization the depositors and its clients. However the US Treasury report found the bank heavily indebted when a severe national ecvonomic depression began in 1873. The bank could not call in its loans and accont holders found it impossibe to withdraw their money. The trustees faced not only a loss o creddibility but also the enormous debts.
Realizing the full extent of the crisis, Douglass urged the Congress to take steps to protect investors from further losses, and later recommended the dissolution of the bank itself. Subsequently, the US Congress passed the legislation authorizing the trustees to close the bank; the company was formally terminated on June 29, 1874.
The failure of the bank amidst the economic crisis created problems and discontent. Although the US Congress approved a program making the depositors eligible to recover as much as 62% of their account values, most did not receive any compensation. The failure of efforts to petiton the government to assume responsibility created deep satisfaction and resentment in the Afrikan American community, hampering entrepeneurship and economic development while fostering its political isolation and disenfrinchisement.
(NOTE) To say the least Douglass, allied with the community of investors and account holders etc, should and could have mounted class action law suit against the goverment for the return of the lost funds. In all, during its existence, the Freedmans Bank for its 480,000 individual and organizational depositors handled and lost 57 million dollars. The case for reparations/restitution could easily made and should have been made at the time. There were individuals who sued the governement but were unsuccesful in their efforts. It is a little know fact that despite being set up for the economic progress of former slaves and Afrikan Civil War veterans, at least 20% of the Banks holding were deposited by Caucasian & Asian depositors, which were also lost in its collapse.
