- Mar 11, 2015
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HOW U.S. BACKED BANKS ROBBED EX-SLAVES OF $66 MILLIONby Jared Brown
August 31, 2016
Booker T. Washington, the Founder of the Tuskegee Institute and the son of slaves, once wrote, “By habits of thrift and economy… we are coming up.â€ The American Dream is deeply rooted in the belief that thrifting and saving are the necessary means to an end that is comprised of prosperity and abundance.
This belief, coupled with the banking needs of formerly enslaved black soldiers, spurred the incorporation of the Freedmen’s Savings and Trust Company in 1865. Â “This bank is just what the freedmen need,â€ proclaimed Abraham Lincoln on March 3, 1865, as he signed the Freedman’s Bank Act and authorized the organization of a national bank for ex-slaves.
Due, in part, to aggressive recruiting tactics, the number of ex-slave depositors grew rapidly from 1865-1870. Thirty-four branches were established in cities across the nation, including Atlanta, Charleston, Philadelphia, and Washington D.C. “Go in any forenoon, and the office is found full of Negroes depositing little sums of money, drawing little sums, or remitting to a distant part of the country where they have relatives to support or debts to discharge, reported a Charleston journalist in 1867.
And yet, thrifting and saving did not yield desired results. The dream of prosperity and abundance slowly spiraled into a nightmare of fraud, mismanagement, and discriminatory lending.
In 1871, Congress authorized banks to provide business loans and mortgages. Paradoxically, such mortgages and loans were usually administered to whites at the expense of black depositors. Risky investments and lending patterns, coupled with cronyism and corruption at the level of upper management, slowly undermined the stability of the bank. According to Black Past, “By 1874, massive fraud among upper management and among the board of director had taken its toll on the bank. Moreover, economic instability brought upon by the Panic of 1873, coupled with the bank’s rapid expansion, proved disastrous.”
The Freedmen’s Bank was officially closed on June 29, 1874. At the point of closing, 61,144 black depositors were robbed of the modern equivalent of $66 million.
â€œThis bank is just what the freedmen need,â€ proclaimed Abraham Lincoln on March 3, 1865 as he signed the Freedmanâ€™s Bank Act.
This happened after slavery. Africans did not do this. The Freedmens bank was controlled by a white board of directors.
From the Freedman's Savings Bank's creations, there were several issues in the governance and management that contributed to its ultimate collapse.
Since inception, the bank trustees had little incentive to govern. All fifty original trustees were White and were not required to give "any security for the faithful discharge of their trust.": 8 Many trustees had little to no involvement with the bank, with some even saying that they had never agreed to be part of the board. In addition, the charter that established the bank contained no penal clauses to bind officials and as a result, trustees were not personally liable for the condition of the bank.: 8
The charter establishing the bank was ambiguous about how deposits could be used, with the exception of a very clear rule prohibiting lending, until the amendment of 1870.: 120 While two-thirds of the bank's deposits were required to be invested in U.S. government securities, the remaining available funds did not have specific restrictions. Osthaus wrote of this particular fact that it was “somewhat disquieting to those familiar with the history of savings banks, for they knew that available funds frequently became unavailable”.: 8 One instance of the bank explicitly going against its charter was the investment of funds in the bonds of the Union Pacific and Central railroads in early 1869.: 145
A series of increasingly speculative investments caused the bank to accumulate bad debt, while the decision to build a new building in Washington, D.C., added to its financial troubles. On May 2, 1870, the bank managed to obtain the authorization from Congress to make loans backed by real estate. However, only half of the deposit funds could be used for real estate loans, and these loans were to be secured by mortgages that were double the value of the loan.: 147
The bank's investments often violated the bank's charter and its amendment. One example is loans totaling approximately $50,000 made to the Seneca Sandstone Company, the owner of the Seneca Quarry, secured by “the company's worthless bonds”.: 154 The loan was approved by Henry D. Cooke, the head of the bank's finance committee, who sat on the board of the quarry company. Bank officials also approved personal loans to themselves as well as associates of the bank. For instance, loans totaling $224,000 were made to Robert I. Fleming, who was the contractor for the bank's building in Washington, D.C. Even as the failure of the bank was imminent and depositors were refused from being able to withdraw their deposits, a secret loan of $33,366.66 was made to Juan Boyle by the actuary George L. Stickney on June 30, 1874. Other instances include investments in the bonds of the Union Pacific and Central Railroads made as early as 1869.: 145
The bank's management closely linked the bank's affairs to the investment bank Jay Cooke and Company, which invested heavily in railroads. As head of the finance committee of the bank, Henry D. Cooke, Jay Cooke’s brother, deposited a significant share of the cash of the Freedman’s Savings Bank at the First National Bank in Washington, D.C., which was Jay Cooke’s office.
When people try arguing against things black people say here, they need to do so from a position of having knowledge of things that occurred. The standard slavery this and slavery that garbage is not coming from that position.