Freedman's Saving and Trust Company
The Freedman's Savings and Trust Company opened in March 1865 and closed in June 1874 because of mismanagement, abuse, fraud, and the economic climate of the day. Thousands of African Americans were faced with financial ruin.
The unclaimed $200,000 in the Free Labor Bank left unclaimed by the African-American Civil War soldiers prompted the U.S. Congress to incorporate the Freedman's Bank. Originally designed as a trust that invested solely in government bonds, the Freedman's Savings and Trust Co. focused on charity as opposed to profit; consequently, it did not participate in the larger banking community. Although the bank denied representatives of the African-American community the right to be involved in decision-making, African Americans kept considerable amounts on deposit at the bank and trusted its soundness.
The bank, which was headquartered in New York, grew to include 34 branches throughout the North and South. The directors counseled the African-American community about the benefits of saving money while misrepresenting the Freedman's Savings and Trust company as a bank guaranteed by the United States.
In 1870, the Freedman's Savings and Trust Company moved to Washington, D.C., into a very expensive new building. Shortly after the move, the bank's solvency came into question. By 1874, the directors recruited Frederick Douglass to head the bank. He invested $10,000 of his own money before he realized that the bank was in trouble. In June 1874, Douglass petitioned Congress to close the failing bank. African Americans had deposited $2.9 million in the Freedman's Savings and Trust Company, representing 61,131 depositors. Eventually the depositors or their heirs received about half of the lost deposits.
The Freedman's Savings and Trust Company symbolized a great financial loss to the African-American community. On the other hand, the bank can be viewed as an accomplishment because a people enslaved for so long rallied their support for a bank with nearly $3 million. To read more about the Freedman's Bank, go to www.archives.gov.