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Chapter 1: What is the main topic discussed in this episode?
This is Ira Glass. On This American Life, one thing we like is a good mystery. Sometimes about really big things, but most times, the little mysteries are the best.
Our lost and found is currently filled with pants. I don't know, I've never seen this happen.
Wait, this is true?
This is true. Mysteries of every size, each week.
This American Life, wherever you get your podcasts. This is Fresh Air. I'm David B. Gincouli. Today is Juneteenth, named for the day in 1865 when enslaved people of African descent in Galveston, Texas, finally learned of their freedom from the system of slavery, effectively ending slavery in this country.
We're going to listen to Tanya Mosley's 2024 interview with Justine Hill Edwards about the story of a bank established in 1865 for formerly enslaved people. Here's Tanya.
In July of 1874, waves of Black Americans rushed to their local bank branches to find out if the news they were hearing was true. The Freedmen's Savings and Trust Company, a bank for newly emancipated Black Americans, was abruptly shutting down, and patrons at bank branches throughout the country were met with locked doors and cashiers who had to break the news. Most of their savings were gone.
The Rise and Fall of the Freedmen's Savings and Trust Company is the subject of a new book by my guest, historian Justine Hill Edwards. In the years after the Civil War, tens of thousands of formerly enslaved people deposited millions into the Freedmen's Bank with high hopes that as free people, they too could create a piece of the American dream for themselves.
Abolitionist Frederick Douglass even encouraged Black Americans to trust the banking system, but even his leadership as the president before its collapse could not save it. Hill-Edwards' book documents how the bank's white trustees drove the bank to the ground by lending out millions in loans to white financiers and businessmen.
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Chapter 2: What is the Freedman's Bank and why was it established?
He could help them in this, again, new period of freedom by establishing a bank for them. And so he gathers John Alvord. He actually wrote letters talking about his fears around the future of freed people in the nation. But one of the things that you say is that he didn't understand that while Black people had little experience with investments and the like, they did know about money.
They earned it and they saved it through their experiences as enslaved people. In what ways did they know that? Absolutely. I think even though most enslaved people didn't have access to banking accounts, for example, or savings accounts, most Americans didn't in the 19th century. The enslaved understood what money meant.
They understood the value of their bodies because capital was held in their bodies, right? They were legally property. They understood what their work could garner, what they could be paid. They often worked for money if possible. It was not uncommon for the enslaved to bargain with poor whites, with other enslaved people, even with their enslavers. And so this idea that the
enslaved and the newly free kind of enter the period of freedom without knowledge of money or savings or thrift as they called it was not true and really incompatible with the ideas that the white founders of the Freedmen's Bank held at this time. What standards were created at the start to ensure people's money was secure? How were they telling them that they would be able to do that?
Well, this was one of the supposed benefits of creating a savings bank. And so the Freedman Savings and Trust Company, what we call the Freedman's Bank, was established as a simple savings bank. The bank was supposed to operate with the least amount of risk as possible. Bank administrators were
supposed to invest depositors' money in government-backed securities and bonds, which again, were seen to be the lowest risk possible financial product. And depositors, if they kept their money in for a specific period of time, about six months, then they would get a small amount of interest back on their money. At this time, it was between 4% and 6%.
And so it was seen to be very low risk, very low cost, and the best way to help African Americans in their transition to freedom. What was the average sum that people were depositing at the opening? Small amounts of money, a few dollars. So we're not talking about hundreds of thousands of dollars. We're talking about thousands of African-Americans depositing money.
And I think it is worth saying, too, that one of the kind of seed funds for the Freedmen's Bank came from the military savings banks established in 1864 for black soldiers.
And so even though most of the first depositors were depositing small amounts of money, a few of the bank branches, especially the ones in Norfolk, which was the first branch, Beaufort, South Carolina, and New Orleans kind of got their seed funding from the military banks established for black soldiers in 1864. Yes.
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Chapter 3: How did the Freedman's Bank impact formerly enslaved individuals?
You tell the story of a Houston branch of the bank from 1866. Someone documented all of the murders and brutal beatings that were happening and basically how freed people were afraid of retribution for any number of things from white perpetrators. It's always remarkable when we see documentation like this because it was pre-everything. We're just talking about things being written down.
Where was this document? Who was this person writing to? Sure. There is a great kind of digest of sources. It's called the Records of Murders and Outrages. And when we talk about the violence of Reconstruction, you can go to these records and read about the sheer scale and the sheer severity of the violence. of violence against African Americans. I think it's apt to call it white terrorism.
And so there is this compendium of records composed by Freedmen's Bank and Freedmen's Bureau officials. And it details the fact that In some places like Houston, for example, one of the reasons why the Houston branch was closed within a year was that white Americans began to harass and vandalize the bank branch.
And white Americans began to harass the black depositors who were using the bank for money. perhaps economic uplift purposes. And so, and so again, one of the reasons why I use the term economic violence here is because economic violence is part and parcel with physical violence.
And, and again, I think it's important to underscore the fact that again, reconstruction was a period of extreme hope politically, economically, and legally for, But African-Americans were under, especially in the former Confederate South, were under constant fears of white retaliation for their willingness to exercise their newfound rights.
So, Justine, this was a bank for Black people, but the people in charge, like the trustees, were any of them Black? At first, no. When the bank was established in March of 1865 and opened its first branch in April of 1865, all of the bank's trustees and the first cashier were white. They were a who's who of abolitionists and politicians and bankers and philanthropists, mostly from New York.
And it didn't take... long, but it did take a couple years. It took two years for the first Black trustees to accept appointments to the bank's board of trustees. All right, now let's get into the mismanagement and ultimate demise of the bank. Take us to March of 1870. Friedman's total deposits at the time, according to your book, equaled out to about $12 million.
That's about $292 million in today's money. How did the idea come about to loan out the money to white businessmen and investors? Well, the bank was incredibly successful in its first few years. African Americans were depositing hundreds of thousands and then millions of dollars into their bank accounts. But in 1867...
John Alvord, who at that time was working with the bank as one of the administrators, he had convinced other trustees that it would be a great idea to move the bank's main office from New York City to Washington, DC. And at the same time, while he was encouraging the trustees to embrace this idea, he invited a group of bankers onto the board that would dramatically shape its history.
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