A Crime Covered In Color: Freedman’s Savings And Trust Bank Plunder In The 21st Century
Vice President Kamala Harris and Secretary of the Treasury Janet Yellen announced at the Freedman’s Bank Forum a plan to loan $9 billion of the previously secured $12 billion to underserved communities and those whose small businesses have been disproportionately damaged during the covid pandemic.
Harris started the panel discussion by honoring Viola Fletcher and her younger brother Van Ellis, two living survivors of the Tulsa race massacre. She spoke about the intentionality of how Tulsa’s Black Wall Street was formed, and the barriers to capital that not only existed then but present day as well. “Black entrepreneurs are three times more likely to report that a lack of access to capital negatively affects their profit margin,” the vice president said. The language from the forum coincided with not only the history of the Freedman’s Bank, but the history of the Freedmen as well.
This appeared to be a grand moment for the Biden administration to announce a pathway for economic inclusion for those whose community was affected by the plunder of the Freedman’s Bank, yet the devil is in the details.
The Freedman’s Bank was specifically established as a financial institution to aid in and assist the economic growth for the Freedmen, the emancipated slaves and their progeny. Approved by Congress and signed into law by President Abraham Linclon in 1865, the U.S. established the Freedman’s Savings and Trust Company with $200,000 of unpaid wages from deceased Black soldiers left in military banks.
“This bank is just what the Freedmen need,” Lincoln said when he signed the act.
The Freedman’s Bank was not a lending institution, it was a savings bank to safely store money. The deposits were meant to be invested in safe government securities in hopes to generate land ownership and business enterprises for Freedmen.
“The bank was a magnificently constructed, highly regarded, and heavily advertised piggy bank,” Mehrsa Baradaran wrote in her book, “The Color of Money: Black Banks and the Racial Wealth Gap,” (2017, page 24).
In 1867, John Alvord asked Henry Cooke, brother of investment banker Jay Cooke, to become the new financial chairman of the bank. The bank’s trustees decided to move the headquarters from New York City to an upscale community in D.C, all paid for by Freedmen savings. On May 6, 1870, Congress allowed the bank’s charter to be amended, deregulating the bank, allowing for bank heads to make risky investments.
With zero oversight from Congress, Freedman’s Savings and Trust Companies became cash windfalls for white speculative gamblers, whose criminal actions denied freedmen communities their hard-earned pennies. Before this theft became apparent to depositors, bank trustees nominated Fredrick Douglass to be bank president in March of 1874. While Douglass did not ask to be nominated, he did all that he could to keep the bank afloat. Nevertheless, in just a few months the bank’s doors were closed for good, in spite of Douglass’s efforts to keep the institution solvent.
The closing on June 29, 1874, left 61,131 depositors without access to nearly $3 million in deposits.
“More than half of accumulated black wealth disappeared through the mismanagement of the Freedman’s Savings Bank,” Baradaran wrote.
On Jan. 7, 2016, Treasury Secretary Jacob Lew renamed the “Treasury Annex” the Freedman’s Bank Building. This year, the annual Freedman’s Bank Forum was held to discuss ways the Biden administration can support financial institutions that service low-income minority communities. Covid’s devastation on Black-owned businesses was emphasized by all of the speakers. Forty-one percent of Black businesses went out of operation between February and April 2020. House Committee on Small Businesses Chairwoman Nydia Velazquez published a report entitled “The State of Black Owned Businesses in America”which indicated that 58 percent of Black-owned businesses were at significant risk of failure before the onset of the pandemic. While large banks approved 60 percent of white business loan applications, only 29 percent of Black loan applicants received approval and then, at higher interest rates. Black businesses had inadequate usage rates compared to their white business counterparts. Moreover, while PPP kept many small businesses afloat, the bureaucratic process made these loans inaccessible to the majority of Black businesses. Via the CARES Act, Kamala Harris celebrated the fact that she and others have earmarked $12 billion to Community Development Financial Institutions (CDFIs) and Minority Development Institutions (MDIs), however, not only Black Americans but all who meet a means test can apply for this money.
Unfortunately, you can’t fix systemic racism with class-based policy. If the aim is to meet the needs of all business owners with fragile enterprises, then do that and be honest about it. Do not anchor Freedmen history to gain political sympathy and then spread the solution to those communities that do not share the Freedmen’s story.
During Reconstruction, it was poor Black workers whose savings were stolen as white businessmen became uber wealthy. Now that same Freedmen legacy is being packaged with current Black business failures to promote loans for all “minorities” and low-income communities.
Harris’ example of Native Americans needing loans does not sit well given the Biden administration’s allocated economic carve-outs to specific tribes for covid relief, then many of these same tribes denied those benefits to Freedmen living on reservations during the pandemic. Congresswoman Velazquez’s report only highlighted Black business plight during covid 19. Based on this study, how does a member of the POC community, specifically an Asian, qualify for access to these dollars when Asian Americans as a whole earn more than any ethnic group in the United States?
One of the byproducts of the whitening of the immigrants was the blurring of distinctions across each group and the erasure of each group’s unique process of assimilation. An often overlooked fact is that various groups brought significantly different resources with them, and those differences correspond closely with each group’s record of comparative success in the United States. An ethnic immigrant’s ability to boost his or her status is based on “the relative social standing of the majority of the members of an ethnic [immigrant] group in their country of origin,” Dr. William “Sandy” Darity Jr. and A. Kirsten Mullen wrote in their book, “From Here To Equality: Reparations For Black Americans In The Twenty-First Century.”
“Abram Harris, a prominent black economist in the 1930s, listed the barriers to black enterprise before the Civil War in the following order: (1) The Difficulty of Obtaining Capital and Credit; (2) Low Wages, Competition for Jobs, and Immigration…” Mehrsa Baradaran wrote in “The Color of Money.”
While it is an unpopular point to make, immigration has had an adverse impact on Black American prosperity. The idea of Blacks having to bear the burden of the impact of immigration has been echoed throughout American history with statements like this:
“Every hour sees the black man elbowed out of employment by some newly arrived emigrant, whose hunger and whose color are thought to give him a better title to the place.” (Frederick Douglass)
In an interview with theGrio at Power Rising 2019 in New Orleans, then-Sen. Kamala Harris sat for a wide-ranging discussion about her 2020 presidential run and her policy outlook agenda for Black America. In highlighting her “all lives matter” political strategy, Harris said, “So I’m not gonna sit here and say I’m gonna do something that’s only gonna benefit Black people. No. Because whatever benefits that Black family will benefit that community and society as a whole and the country, right?” VP Harris has remained true to her political brand as the Democratic party has remained true to its doctrine of benign neglect when it comes to today’s Freedmen.
The Freedmen’s Forum was an egregious slap in the face to the community whose ancestors built the wealth of America through forced labor, then experienced emancipation under an order of systematic white economic plunder. If Biden wants to rectify America’s atrocious history of shutting black Americans out of the American economy, then designate policies that are specifically for them.
A rising tide lifts all boats, except Black boats. These boats have been ravaged with holes from a legacy of slavery and Black Codes. We don’t need to stay on this same journey, we do not need to repeat this again.
This is a call to action from the United Sons & Daughters of Freedmen to take a stand against this blatant act of disrespect. Getting the Biden administration and the Department of Treasury to either change its policy, or discontinue the usage of the name of our Freedmen ancestors, will play a major part in taking back our narrative.