how Black depositors funded the nation’s capital

Transcript

The following is a rushed transcript and may contain errors. A proofread version will be made available as soon as possible.

Mansa Musa:

Welcome to this edition of Rattling the Bars. I’m your host Mansa Musa. Today we are joined by Justene Hill Edward, Associate Professor of History at the University of Virginia. And that’s the Hogies, right?

Justene Hill Edwards:

The Cavaliers.

Mansa Musa:

The Cavaliers Hogan. And I saying that in just because I know when you say Hoges, Virginia Tech and Virginia is

Justene Hill Edwards:

A

Mansa Musa:

Ongoing struggle. Her research investigates the intersection of African American history and American capitalism, especially how slavery shape long-term economic inequality. We are here to discuss her latest book, Savings and Trust: The Rise and Betrayal of the Freeman’s Bank. It is an honor to have you please introduce yourself to our audience.

Justene Hill Edwards:

First, thank you so much for having me. I’m happy to be here and happy to have an opportunity to talk with you. Again, I’m Justene Hill Edwards. I am an associate professor of history at the University of Virginia, and my research, my writing, my teaching focuses on African-American history. And I am fundamentally interested in the intersection of the history of slavery, the history of capitalism, and how that influences Black economic life in America.

Mansa Musa:

And you’re doing a good job in terms of occupying this space. This is Black History Month. And oftentimes, and rightly so, we recognize contributions being made by people of African descent. But more importantly, what the establishment does in trying to control the narrative and control the messages, they focus on particular people and particular events and paint with a broad brush. This is African-American history. But what the professor is doing is tackling a part of our history that very few people know about the economic aspect of our thinking. And more importantly, how our financial thinking was during certain periods of Jim Crow, Reconstruction and so forth. But in your first book, Unfree Market, you argued that exploitation during enslavement set the stage for economic violence today. How does the history of violence explain the mass racial wealth gap we see in modern US economy?

Justene Hill Edwards:

Sure. Well, I mean, I think fundamentally we have to understand the impact and the influence of the history of slavery and the way that the institution of slavery in general affected almost every aspect of American life, especially for Black Americans, both enslaved and free. And so in my first book on free markets, I look at an aspect of American history, but really an aspect of the history of slavery that a lot of historians had not really understood or considered. And that is the fact the reality that the enslaved had an understanding of money, they understood in really important ways, finance, they had access to money, they saved money, they wanted to accumulate property. And so they had been developing these ideas from the first moments of slavery in the 17th century. The idea of the slaves economy is what I call it and what historians call it.

And so that got me thinking a lot about the fact that, well, first I asked this question, what was the impact of slaves having money? And one of the ideas that became really clear to me fairly early on in that process was that I realized that the fact that slaves had money actually didn’t give them any more access to freedom. So few slaves could purchase themselves out of slavery by their emancipation or the freedom of their families. And so it made me think, I think more critically about the relationship that I had about money and access to the political vows of freedom and really complicating that. Does more money equal more freedom? And I think we see, if we look at the Black American experience, not just in the modern period, but really even in the period of slavery, I think we get a fundamentally different understanding of that, that having money can mean that you have more freedom, but if you’re Black, not

Mansa Musa:

Necessarily. All right. And let’s flesh out the concept of the slave economy. What is this system and how did the enslaved people use it to survive? And take your time unpacking this because you said that slaves, when we say slaves and slaves understanding money and economy, this, that and third, automatically make a person say, “Oh no, this is everything we have with slavery is subjugation, bowing down, cowingtown.” And like Malcolm said, work from sun up to sun down. So to even have an alternative thinking of it than being chartled is maybe our audience think like this is a stretch of imagination, but go unpack that because this is interesting for them to understand that a person’s thinking is not stagnant based on what you see them doing. A person’s thinking is based on what they think about themselves and where they want to go at with their lives.

Justene Hill Edwards:

Well, I mean, the idea of slaves with money, I think is so fascinating. And you’re right. In some ways it does rub up against what we probably all believe about the institution of slavery. But what I found in my work and what my first book is about is that slaves had access to money, again, from the very first moments that slavery became an institution in the American colonies. They were, especially in places like Charleston, we see this in Savannah. There are all of these sources that show us that slaves, especially enslaved women, were running marketplaces, were selling goods to Blacks, to whites, to their own enslavers. They had access to money, that they were really an important part of these kind of colonial economies that were growing and expanding based on their labor. And so it was not uncommon, again, to see slaves fishermen, to see enslaved fishermen go fishing and sell fish to whoever would buy them.

It was not uncommon for the enslaved to keep livestock, to keep chickens, and to trade and sell with one another, and to trade and sell with those who enslaved them or even poor whites within their communities. And so this was actually fairly visible. And interestingly enough, places like South Carolina and Georgia created laws around how the enslaved could have access to their own money and the profits from their labor. Yeah. And so it’s one of those aspects of really understanding the lives of the enslave that I think is not fully explored or explained. And I have for a long time, really for my entire career, been really invested in understanding this aspect of slave life, especially as it connects to my broader interests in Black economic life in America.

Mansa Musa:

Which brings us to your latest book, Savings and Trust. So how did the Freeman Savings Bank evolve from its earlier military savings bank used by Black union soldiers? Talk about the evolution of it.

Justene Hill Edwards:

Well, so the Freedmen’s Bank was founded in 1865, and so this is in the final months of the American Civil War. And it was established and founded as a savings bank for recently emancipated African-Americans. And so it was kind of established and founded by a white abolitionist named John Alvord. And he was a minister. He was an attache of the union military, and he was traveling around the South in 1864 and 65 and had the opportunity to speak with fricking Americans, especially in places like Atlanta. And he took this chance to ask them what they were looking forward to in this period of freedom about their lives and slavery. And they overwhelmingly told him that they wanted two things. One, of course, they wanted to be reunited with their families, but two, they wanted land and they wanted access to land. And importantly, they were talking about buying land.

They were not really talking about being given land by the federal government. They wanted to save money to buy land and to have that land protected, to have their property rights protected by the federal government. That was incredibly important. And so the Freedmen’s Bank came about in this period of time in early 1865, and it was established, again, to serve the financial needs of almost four million recently emancipated African-Americans after the end of the war going into the early years of Reconstruction.

Mansa Musa:

Okay. So during that period, we had an underground economy that we had a sense of money. We was enslaved when we had this sense of money. We had a bottling system and we was able to save money and have money. We evolved out of this in the same mentality coming out of slavery, but now we out of slavery and now our thinking just shifted. Talk about that. Talk about this shift in following the 13th Amendment. What were the economic goals of formerly enslaved people and how did they differ from the goals of the bank whites leadership?

Justene Hill Edwards:

This is incredibly important. And so the reality was that recently emancipated African-Americans again wanted to buy and own land and they wanted essentially a safe place to keep their money to take a bit of a step back. Banking in this period of time was incredibly speculative. There was a high amount of risk. Commercial banks were seen as being an incredibly risky investment,

But the Freedman’s Bank, the Friedman Savings and Trust Company was established as just a pure savings bank. It was only supposed to accept deposits of former slaves, give them a small amount interest on their money, and then that was about it. It was designed to operate with the least amount of risk possible. There was supposed to be no lending. Loans weren’t supposed to be made. It was just supposed to accept deposits, keep deposits safe, and allow the formerly enslaved to have a safe place to store and keep money so that they could buy land by property. But this goal ran counter to the goals of the bank’s founders. Now, all of the bank’s founders were white. They were an incredibly prominent, an incredibly well-connected group of white Republicans who worked for the Lincoln Administration, who were volitionists, who were incredibly influential politically in this period of time.

And again, the Freedmen’s Bank was established as kind of a benevolent institution, a nonprofit institution, if you will. And the bank’s white founders believed that they needed to teach African-Americans about the benefits of saving, that they needed to teach African-Americans about fiscal and financial responsibility. What they didn’t understand though was that, of course, African-Americans, Black Americans, the formerly enslaved, had come into freedom with ideas, very concrete ideas about the benefits of saving. They understood then complicated ideas of finance like mortgaging because they themselves were mortgaged. They were a capital, they were used as financial instruments. And so we have this kind of clash happen between fricking Americans and the white bank administrators not understanding what the goals of African-Americans were. And that wasn’t really to keep their money in the bank for long periods of time. They wanted to make money, save money, and then withdraw money once they had enough to do what they really wanted to do, which at this point was buy land.

Mansa Musa:

Right. It’s interesting because the evolution of that thinking, that thinking always was evolving into what’s security mean for us. Security means for us is the ability for us to take care of ourself and not be dependent on no one. So in terms of our concept of storing our money, we’re storing our money primarily for we got a goal, we just need a safe place to keep our money.

Speaker 3:

Our

Mansa Musa:

Goal is we want this 35 acres of land that we get ready by. But more importantly, we want this 35 acres of land and we want to buy enough animals for it to develop to become profitable and be able to sustain our family. Talk about the betrayal. How did President Johnson Partner and Confederate soldiers lead to the loss of land for Black people? And what’s the core relation between that and the banks?

Justene Hill Edwards:

Yeah, no, that’s a great question. And so 1866 is a really interesting year. In January of 1865, we have the founding of the Freedmen’s Bank. We have that first meeting to come up with the management of the Freedmen’s Bank. The Freedmen’s Bank is established on March 3rd of 1865. March 4th, 1865 is Lincoln’s second inauguration. Lincoln is assassinated in April of 1865, and then we get the ascendants of his vice president, Andrew Johnson. Now, Johnson was less friendly to the theaterest of African-Americans. Initially, he had actually come out in public support of the Freedmen’s Bank in the fall of that year, but his main goal was to reincorporate former Confederates into the body politic, restore their political rights. And so he does this in exchange for turning a blind eye to what the founders of the Freedmen’s Bank is doing. And so with the kind of integration of former Confederates allowing them to give an oath allegiance to him and the union,

They are restored political rights, restored land, and the political economic goals of African-Americans are put on the back burner for a period of time. And so we see that there’s really no oversight of the Freedmen’s Bank, even though it was supposed to operate with the least amount of risk possible. Congress was actually supposed to supervise the bank.This is a period of time when we have our first financial regulator, the Office of the Comptroller of the Currency, and this is supposed to be the kind of person, the group that was supposed to regulate banks, and it does not. And so we have this shift in 1865 where the Friedman’s Bank is allowed to just run. There’s no oversight, and the bank’s republican administrators start to, I say in the book, chip away at the bank’s benevolent foundations, meaning that they care less about the economic interests of African-Americans, and they care more and more about what the bank can do for them, both politically, but importantly financially as well.

And

Mansa Musa:

That led to the shift from becoming more saving to more lending. Like you say, the overall option concern now is profiting

Speaker 3:

Versus

Mansa Musa:

Being there to provide a service for its customers. Now it shifted. How did that shift impact the overall landscape in terms of the banking system?

Justene Hill Edwards:

Yeah. And so again, this happens fairly early on in the bank’s history. The bank is established in March of 1865. The first illegal loan is made by the bank’s finance committee in April of 1867, so it only takes two years. And the man who received this first loan, his name is D.L. Eaton, and he would come on about 10 days later, he would come on to be the bank’s actuary, which is the person responsible for evaluating the investments and the risk profile of the bank’s investment. So he was the wrong person to get this loan. And so again-

Mansa Musa:

The Fox and the chicken home.

Justene Hill Edwards:

And so the bank was chartered by Congress. Again, not to make loans. There were discussions in Congress about this, but Charles Sumner, an important radical republican ignores this. And then a man comes onto the bank’s board at this time that kind of further pushes the bank from its initial goals. A man named Henry Cook. He and his brother, Jay Cook, founded what was called J. Cook & Company. This was the US’ first investment bank. They were very close with Lincoln, very close to influential members of his administration. And so Henry Cook joins the board, becomes the chairman of the finance committee, and between 1867 and May 1870, they lend about $85,000 of money to their friends and their business partners.

Mansa Musa:

Yes. Yeah. And we can see that the initial design savings, people earnestly putting their hard earned money into this for saving with their vision and it’s a good vision. My vision is to have a place save my money, which going to give economic boost to this town, which going to put more money into the savings, which is going to create more job, more the whole concept what we see in the Republican Party now, the trickle down economy. Well, this is a trickle down economy at its finance. But talk about the betrayal. How was the money of Black deposits used often illegal to fund the infrastructure, Washington, DC?

Justene Hill Edwards:

This is a really fascinating and kind of infuriating part of the story, if I’m being entirely honest. So Henry Cook lobbies members of Congress in 1869, 1870 to amend the bank’s charter, to allow it to be essentially a commercial bank, allow it to make loans. This happens in May of 1870, and from there, the floodgates open, and friends and business partners of the bank’s predominantly white board of trustees get millions of dollars in loans. Some of these loans go to construction companies that help build out parts of Georgetown and DC. Actually, Howard University received about $75,000 in loans to help with its construction, but by and large, those who received loans were, again, work working in construction, working in the Board of Public Works of DC. And so essentially it was African-Americans money that helped to funnel capital into helping build out Washington after the war during this really important period of reconstruction where we see the kind of geographical expansion of the District of Columbia.

Mansa Musa:

And like you say, it’s infuriating because when you look at the blight during that period, how we was in slums or how we was in squalor, our money was being used to build up an infrastructure that we had no right to have assets to, that we had no right to be contributors to. We couldn’t go start our own construction company, or we had one. We wasn’t going to be able to compete with capitalists, and it’s our money. It’s our

Justene Hill Edwards:

Money that- Funded by African Americans.

Mansa Musa:

And based on the idea that they systematically destroyed because of the value in that idea. Talk about, as you look at the situation today and how we see that we spend billions of dollars on commercial products, when we look at our overall wealth in terms of as we outsource it to corporate America and commercial America, how do you see us getting into a space where we can be back to that person that said, “I want to take my money out the mattress. I’m going to take my money out this hole in the ground.

Speaker 3:

I’m going

Mansa Musa:

To take my money out the chicken coop. I’m going to put it over here in this place right here.” With the goal of all of us, it’s 20 of us, we saying, “What’s our goal for putting our money here? Our goal for putting our money here is to buy land, create some security for us and our family.” How can we get back to that or is it impossible to get back to that?

Justene Hill Edwards:

No, I don’t think it’s impossible. I think part of this is really encouraging Black communities to think about where they are spending, where their capital is going. And it might be perhaps investing in community-owned banks or credit unions. It might be thinking critically about buying land and buying property to create that generational wealth and conversations about generational wealth. Some say that financial literacy is a part of this, and yes, that is kind of one component, but that can’t be the be all and end all of the conversation. I think it has to be Black communities, Black folks at large, thinking critically about how do we use our economic power to make our communities better? It has, I think, to be a community conversation because without that, we are not being conscious consumers in terms of how we spend money, where we spend money with whom, and where that money is ultimately going.

Is it going to help members of our own communities? I think that’s incredibly important.

Mansa Musa:

And as you’re saying that, I was thinking about industrial bank being one of the banks that … And I remember this one woman, she was doing a thing, her whole program was around returning citizens, people coming out of prison and creating an economic thing for them. And she went to Industrial Bank and got them to agree to create an economic plan and a funding system and a banking system that would allow for, much like what we was talking about earlier, to allow for them to be able to save their money towards the goal. Okay. So you had the last word. What do you want to tell our audience about this book and our audience about what you’re doing now? And more importantly, how they can become more aware outside of reading your book, but become more aware of the value in understanding this particular part of history.

Justene Hill Edwards:

Yeah. No, I appreciate you posing that question, especially because I think it’s so important this being Black History Month that we think about these questions. I mean, in general, I think outside of the book, which again, I think the history of the Freedmen’s Bank is so fascinating, it’s as fascinating as it is heartbreaking, but it’s also, I think, empowering. I think that there’s been this kind of narrative of African-Americans, of Black folks not having the tools to provide for themselves economically, for our communities to build and maintain wealth, but that’s a farce. That’s actually not at all true. If we look at this period, if we look at the first moments, the first days of freedom, we see that Black Americans know what they want, know what they need and know what they need to do. And they were doing that strategically, not individually, but within their families.

I talk about instance, the families going to the bank fathers, opening accounts for their daughters, mothers bringing their children children to the bank with them.

And so this is in our history, this is in Black history. And so this narrative of the racial wealth gap being Black American’s fault is not at all the case. We are fighting institutional factors that have historically tried to put us at economic disadvantage. And I think the Freedmen’s Bank is actually a perfect example of that, a perfect counter to that narrative. And too, I mean, really what I want your viewers and readers of the book to really understand is that there is a reason why, for example, members of my family put and save money in a mattress, put and save money in a coffee can. That’s not irrational behavior. Right, right,

Mansa Musa:

Right, right. Come on, that’s true.

Justene Hill Edwards:

That’s true. They are doing it because of this historical knowledge about what happens historically when African-Americans have trusted their financial power to bankers, to banks, to traditionally white-owned financial institutions. And so just being critical of that and understanding that Black communities have economic power and we are totally equipped to figure out how to use it, how to marshal it to make our communities better.

Mansa Musa:

Dr. Professor Hill Edwards, you rattle them bars today. And I want to remind our audience to understand this here. We’re talking about people that was captive, put in a slave that during that period, they had a vision on what they wanted to do with money. So they went and got money and they created an underground economy that allowed them to have money. Coming out of slavery, they had money. They understood the value of it and what they wanted to do with the money

That this idea was systematically eradicated from our people for the sole reason because of our greatest. Our people, no matter what you do to us or try to do to us, we always rise like the Phoenix. And Edward, you really showed us, give us a broad understanding of this and of this thinking. And it’s important that we recognize this and understand why people put money in the camp, but more importantly, understand that the idea that we had about what we wanted to do with the money was about building generational wealth. We hear this term all the time, but we had this thinking way, way, way back then. Thank you, professor. I really appreciate you coming in and educating our audience. We ask that you continue to look at the real news, because guess what? We actually the real news.