Savings and Trust: The Rise and Betrayal of the Freedman's Bank

by Justene Hill Edwards

A leading historian exposes how the rise and tragic failure of the Freedman’s Bank has shaped economic inequality in America.

In the years immediately after the Civil War, tens of thousands of former slaves deposited millions of dollars into the Freedman’s Bank. African Americans envisioned this new bank as a launching pad for economic growth and self-determination. But only nine years after it opened, their trust was betrayed and the Freedman’s Bank collapsed.

Fully informed by new archival findings, historian Justene Hill Edwards unearths a major turning point in American history in this comprehensive account of the Freedman’s Bank and its depositors. She illuminates the hope with which the bank was first envisioned and demonstrates the significant setback that the sabotage of the bank caused in the fight for economic autonomy. Hill Edwards argues for a new interpretation of its tragic the bank’s white financiers drove the bank into the ground, not Frederick Douglass, its final president, or its Black depositors and cashiers. A page-turning story, Savings and Trust is necessary reading for those seeking to understand the roots of racial economic inequality in America.

Genres: History, Nonfiction, Business, Race, American History, Audiobook, African American

336 pages, Hardcover

First published October 22, 2024

Reviews

[Lois · Rating 5 out of 5]

This is SO good. This history is shocking and upsetting but also fascinating. I had heard of The Freedman's Bank but wasn't at all familiar with the details, only the impact on the Black Community. I grew up in Detroit and am a proud graduate of Detroit Public Schools. I graduated in the early 90s. My high school history teacher told our class that the failure of the Freedman's Bank is why so many of our relatives don't use banks. My family used banks, but I had Black teachers at the school who did not. I had neighbors who did not. When I was a sales manager for a major cell phone company in the city with mostly Black employees, half of my staff refused direct deposit and had no bank accounts. I knew it was tied to this historical banking crisis, but I had not realized how severe the failure was. So when I saw this book on NetGalley, I was extra excited to review it.

This was fascinating in so many ways. I did not know much about early banks in the US. I had not realized that Savings & Loan operated as a style of Bank, not as an option at a regular bank. It's been lost in the history of the immediate post Antebellum period, but white abolitionists become obsessed at the end of the Civil War with this weird idea that formerly enslaved folks were lazy and looking for charity. There was no concern that former enslavers, who had proven themselves generationally to be too lazy to nurse or even care for their own kids, would be expecting charity from the government. In fact, former enslavers were expecting governmental charity and received it in restitution for the loss of their formerly enslaved property. Yes, quiet as it's kept, enslavers were paid reparations for slavery but the concern was that the formerly enslaved might have expectations of fairness. Let me not digress here.

The Savings and Loan Freedman's Bank was established primarily so that Black Union Soldiers could save money to care for themselves. This was the social movement of the era, the equivalent of a social safety net. So many working class populations were encouraged to invest their meager wages in a Savings and Loan Bank for their own retirement. These were not commercial institutions. They were supposed to be protected places to keep your money, and no great interest was expected to be earned on the monies held within, but you would at least get back what you invested. Banks that functioned as investments in loaning money to the community were different institutions.

The Freedman's Savings and Loan Bank was started and ruined by white men. Frederick Douglas was brought in only in the final years, after the bank was failing due to illegal mismanagement by the white leaders. Largely so he could be the public face of the failure. He took the job in an attempt to prevent the collapse of the bank, and in the event of a collapse, he hoped to be able to help the Black Community recover what assets it could.

The long and short of it is that formerly enslaved Black folks had more wealth than white folks expected. They trusted the system and invested "over $ 75 million ($ 1.9 trillion today)." The long and short of it is white people illegally stole the money and caused the bank to fail through their racist and illegal business practices. They stole millions from formerly enslaved peoples and mostly used the money so they and their friends could profit. When the bank was opened to giving out loans, Black folks who had used the bank to hold their money weren't eligible to borrow or take out a loan. So our own wealth wasn't even allowed to be used to grow our own community. After the white folks had stolen all they could, they placed Frederick Douglas in charge so the bank would be a visible failure of Black folks to perform in the financial sector. The government refused to even distribute the millions left in the bank when it failed to those who made deposits so they could recover any of their investments. The government failed to uphold its own laws and hold the white bank managers accountable for their theft.

It's so deeply shocking it honestly makes the case for Reparations all on its own. It's frustrating because victims of the Holocaust are allowed to fight for what was stolen from their families during WW2. Yet the exact same justice is denied Black Americans even when the issue is clear-cut thievery with an easy to trace record. I felt like this after learning about the Osage Murders dramatized in the movie Killers of the Flower Moon. The white folks who currently own this land are the direct descendants of those who murdered to steal it. How come they don't get their land back, at least? There's no reparations when white folks violate People of Color, only when white folks violate other white folks.

This is excellently researched and extremely interesting. There's a lot of history that isn't in the regular history books. The only good to come of this is that when the stock market crashed in 1929, Black folks didn't have much money in the system to lose. The long arm of this is brutal as far as impact today.

Thank you to Justene Hill Edwards, W. W. Norton & Company, and NetGalley for the opportunity to read and review this ebook. All opinions and viewpoints expressed in this review are my own.

[Calvin Schermerhorn · Rating 5 out of 5]

What is the history one of the biggest bank failures in American history and the largest loss of Black wealth until the twenty-first century? Justene Hill Edwards's deeply researched and gripping narrative takes the reader behind the scenes of the Freedman's Savings and Trust Company, a.k.a. Freedman's Bank, a federally-chartered trust company set up for a noble purpose: to give tens of thousands of recently-freed African Americans a safe place to deposit their money where it could earn interest. Many depositors including women and youngsters deposited coins and meager earnings. The goal was both lofty and practical. The Freedman's Bank wasn't supposed to be a mortgage company or a slush fund for Gilded Age robber barons. Initially, its directors, who were overwhelmingly white, ran the company on a thin margin and did their job of protecting hard-earned Black assets. But the Freedman's Bank soon pivoted to what we might call crony capitalism: its branch directors, cashiers, and finance board lent to their friends including real estate developers and firms who bet on transcontinental railroads and other risky investments. And little by little, the overwhelmingly white borrowers gambled with African American depositors' money--money that was supposed to be invested in safe government securities. Professor Hill Edwards tells this story evenly and convincingly, and this is not a polemic. The historical record shows that after the Panic of 1873, African Americans awoke to the fact that they had been robbed by their own bank. The Freedman's Savings and Trust gambled away their money on dodgy investments that went largely to whites and wiped out most of America's Black savings. After the institution went into receivership, the hue and cry coming from Congressional watchdogs looks in retrospect more like crocodile tears since many of those good-government activists were in fact white supremacists who had no interest in righting the wrongs of a bank that was conceived nobly but run fraudulently. And the results had long-term devastating consequences that are still with us.

[Finnley Baker · Rating 4 out of 5]

Reading this book has given me a deeper understanding of the financial area of the reconstruction era for newly freed people, as someone new to researching deeper into the history of the United States (and knowing nothing of early banking practices) I found this to be a great book to read. The writer clearly explains the details of the bank and those in charge of the freedman's Bank, she has a nice prose where it doesn't feel as if you're reading a history book and the stories of depositors of the bank helps keep you focused on the human aspect of the story rather than a topic. The downfall of this bank due to white greed affected an entire generation of freed people who were looking for full financial freedom and the success that comes from it, the fall and subsequent delays/denial of full payment to depositors has caused a massive ripple to the African American communities to modern day. Being able to have full context to this time period and the actions of these individuals helps readers to have a better understanding of how quickly White people in power (of the bank and government) bullied the African American people from such an early time after their emancipation. This book has given me the desire to continue researching history and the financial divide between white people and minorities.

[Debra Foster Greene · Rating 4 out of 5]

Many may know the general history of the Freedman's Savings and Trust Company. Edwards looks at this history through a different lens. She argues that in its time, it was another form of violence against newly freed people. An assault on their trust in the financial industry. Edward writes . . . the strategic pillage of the Freedman's Bank by white capitalist represents another type of violence against African Americans . . .It was financial violence by theft. She further states that white men came out of the 1893 Panic on firm ground while African Americans faced financial losses that shattered their dreams of economic uplift.

White Americans used the bank's failure to fuel stereotypes of Black people's lack of fitness for political and economic inclusion. Ignoring the fact that the white trustees and commissioners had used the deposits of black citizens as their personal piggy bank.

Edwards postulates that the bank's demise was one of the origins of the U. S. 's racial wealth gap.

Very readable and recommended to anyone interested in United States history.

[J · Rating 1 out of 5]

(this review covers only the first half of the book, which is where I gave up.)

This book is unreadable, sadly. I am 100% willing to believe that racism and corruption led to the collapse of the Freedman's Bank, a 19th century experiment to uplift former slaves by providing them with financial services. This book got me interested in hearing that argument -- it just fails to make such an argument itself.

At several points the author either butchers key facts or fails to explain them clearly, for example claiming on page 9 that depositors recovered 59% of their deposits, and then on page 10 that they recovered 20% of their deposits "on average." (I assume there's some distinction here that I'm missing, but that's really on the author, not the reader.) The argument also steps on itself, with the author criticizing it both for losing money by not investing in profitable enough investments to offset its costs, and for pursuing riskier investments in search of profit. There's also precious little context. I have the vague sense that banking in the late 1800s US was a hot mess and lots of people lost their money; because Savings and Trust doesn't go into this at all, you'd have to go elsewhere to understand how aberrant the behavior here was.

The weakness of the argument would be bad enough, but the entire thing reads like a first draft. There is so much unnecessary repetition that one wonders whether anyone even read it over before sending it off to the printer. Here's a characteristic example from pages 119-120:

[Some of the bank's capital] would be available for investment "in real estate & in bond and mortgage on real estate double the value of the loan." For anyone receiving a loan, the real estate collateral had to be at least double the value of the loan. The amendment would therefore require the bank's underwriter, Eaten in this case, to ensure that borrowers could secure the loan by real estate twice the loan's value. So a borrower who wanted a $1,000 loan from the bank had to prove that he (or she) possessed real estate worth $2,000."

Almost every page is like this, using five sentences when one would do. If only the book had stopped beating readers over the head with multiple paragraphs doing things like defining the exotic concept of "double", maybe it could have developed a real argument about what happened here. That's the book I thought I was signing up to read.

[Caleb · Rating 5 out of 5]

A tremendous and important book, painstakingly researched and written, that tells a little known story about the fleecing of emancipated slaves during Reconstruction.

I first heard about Freedman’s Bank in a DEI training that helped explain the context around African Americans being disproportionately unbanked and underbanked. Much of that can be traced back to Freedman’s Bank.

Anyone wishing to better understand the racial wealth gap, should read this book.

BONUS: I got to interview the author for my podcast, Oh My Fraud. Listen here:

https://podcasts.apple.com/us/podcast...

[Adrian · Rating 5 out of 5]

If you want to understand why there still exist a feeling of distrust in the collective conciousness of Black People and People of Color in the US about institutions and systems, Read this book. Dr. Edwards paints a clear picture on how some of the leaders of the Freedman's Savings and Trust Bank (mainly white) actively worked against fulfilling the bank's mission to recently freed peoples.

[K. · Rating 5 out of 5]

The story of the Freedmen’s Bank is filled with such wrongdoing and recklessness that it may inspire some feelings of defeat in the reader. But I really liked reading this book. I learned a lot about an important subject that I am frustrated wasn't covered more extensively in my previous education. This is a major and revealing example of how freedmen didn't fail to rise up, but were kicked down.

I was a history major as an undergraduate, but in recent years I've read a lot more politics and current events than history. Those books use history as context and evidence, but it was refreshing to move in the opposite direction, learning in detail about events that happened 150 years ago and thinking about their effects that persisted for decades. (Or still persist.)

This book was written in a very understated tone, but it did justice to the sheer awfulness of the facts by not pressuring the reader to realize how immoral the situation was through overwrought language. We didn't need that layer of authorial voice- and I found I really appreciated this “transparency” (not quite the right term but I can't think of a better word).

I was also struck by the baseness of the motives and behavior of the bank's wealthy white leadership and borrowers. Some people who were ALREADY obscenely wealthy knew a good mark when they saw one- 4 million freedman who were in desperate need of a safe bank. And they accomplished the fraud through what? Bald faced lies. Not ingenious maneuvers. They told freedmen their deposits were safe- it was just a lie. They told congress they would follow its stipulations- just another lie. They told Frederick Douglass the bank was doing better than it was, to trick a black person into coming on board and taking the fall for their crimes- just another lie!

The bank stole the money of 67,000 depositors, which is 1.7% of freedmen. And it's just one (albeit the most well known) of the many financial schemes used to defraud and steal from poor people who had already suffered the monstrosity of slavery.

I said this book may make you feel defeated, but writing this review I've found it turns to anger eventually.

This is a great book and I recommend it to anyone interested in American history.

5 / 5 stars.

[Chris Jaffe · Rating 4 out of 5]

This is a pretty good work on the Freedman's Bank. The main knock I'd have on it is that while it says up front that it wants to tell the story of the bank from multiple angles - from those up on high who ran it, as well as for those down on bottom who put their money (and lost their savings) in it, the book ultimate is far more about the movers and shakers. There are some stories of individual depositors for that dimension, but it's less than expected.

The Bank was supposed to be a savings bank, which were designed to help the poor rise up. It turned into a commercial bank, whose purpose was to make money. The bank's failure wasn't due to those on bottom, but those on top making reckless, unnecessary loans - and sometimes self-serving loans to themselves. Ultimately, the money of freedmen went into the pockets of white financiers, leading to the bank's failure.

Frederick Douglass was the head of the bank at the end, but that was only when it was in its death throes. The original 43-man Board of Trustees was entirely white people. They'd get a few black faces later, but the key decision makers and direction setters were always whites. The Bank did have a problem early on in 1865-66 when it expanded too quickly, and trying to pay for its full operating costs were always difficult. By the late 1860s and early 1870s, the Board got Congress to expand its ability to make investments, leading to shadier deals. Many Board members themselves received loans from the bank. 80% of its loans went to white borrowers. The failure of the Cooke banking firm in 1873 kicked off a national recession of considerably severity, and began the Freedman's Bank's deathwatch. It closed in July 1874.

Efforts were made as late as 1911 to give money back to the depositors who lost their wealth, but the best they ever got came in 1883, when they received 7% of their lost wealth - provided they could prove they had money in it when it went belly-up in 1874.

The bank's failure hurt black economic prospects and left a lingering mark in how black Americans perceive Wall Street and banking.

It is a quality book.

[Michael Morris · Rating 4 out of 5]

Savings and trust by Justene Hill Edwards is an account of the history of the Freedmans bank. This is one of the biggest bank failures that most people have never heard of. This little known story that takes place in the aftermath of the civil war. The government as part its effort to help 4 million formerly enslaved people into the greater American society. The bank had been formed in 1865 to help provide this segment of society a way to build wealth and contribute. The bank was in business for a few years. However by 1874 it became insolvent and closed their doors. Edwards details went from a noble idea to a cautionary tale. She showed how several factors contributed to the failure including a rapid expansion, excessive operating costs and lack of oversight of the bank’s operations. The main reason for the failure stemmed from the bank’s board of trustees. This group who was supposed to mind the store used their position to make sweetheart loans to themselves, their friend’s and business associates. Edwards used the story of the bank to make a case on how it had contributed to the racial wealth gap today. The book was a little dry in a couple of sections. It gives several accounts of the lives of small depositors which helped offset those accounts. The book is a sad commentary on how unchecked greed of a handful of people can destroy a significant number of lives.

[Kesh · Rating 4 out of 5]

One of the epiphanies I had reading this story was that all the stereotypes of Black people's paranoia regarding things like banks, healthcare, dogs all stem from a collective memory of a very real/traumatic event. The actions mimicked generations later in isolation can easily be judged as ignorant and the people still harboring distrust might not necessarily understand the details of the things they have a 'natural' aversion for but it's a way to try and protect yourself from a system that has not only set you up to fail but will later blame you for failing. It would be fascinating to find out how the descendants of all these white men's families are currently doing because there's no reason the families who lost all their money shouldn't be able to still be recompensed. The other epiphany is to be very skeptical of Black faces being put in places of leadership. This generally happens when an organization is looking for a scapegoat or punching bag to take the blame as the rock bottom is almost certainly on the horizon. (i.e. Obama)

[Austin Gilbert · Rating 4 out of 5]

Justene Hill Edwards's "Savings and Trust" takes a look at the founding and floundering of the Freedman's Bank following the conclusion of the Civil War. Like all roads to Hell, this was paved with the best intentions of building black wealth and trust in white institutions. Almost immediately into its existence, it turned into a piggy bank for the majority-white trustees; administrators; and friends of, at the expense of newly-freed black Americans trying to build homes and futures following the end of slavery.

This is highly readable, even if you know little about Reconstruction, banking, or charters. Edwards takes you from theory to practice to misuse, and lays out how its failure set the stage for generations of wealth inequality between black and white Americans.

[Andrea Wenger · Rating 5 out of 5]

This meticulously researched book reveals the untold story of the Freedman’s Bank. This post-Civil War institution promised economic empowerment for formerly enslaved people but was ultimately sabotaged by its white financiers. Through deception and devastating mismanagement, the hopes and trust of its Black depositors were betrayed—contributing to generational economic inequality.

This story is absolutely gutting. It’s a gripping read for everyone who cares about American history.

Thanks, NetGalley, for the ARC I received. This is my honest and voluntary review.

[Jeanne · Rating 5 out of 5]

One of these days, I'm going to quit selecting books that make me disgusted to have white privilege. Reading this excellent account of how white men in power used their position and power to swindle hard-working black people out of their hard-earned money after emancipation made me feel guilty by association. The idea of the Freeman's Bank was such a good and noble thing to do. Greed and deceit ruined it.

[Anna Marie · Rating 4 out of 5]

When a bank is opened for former slaves during the Reconstruction but is run by a board of only white men the betrayal is baked in. Original the funds were invested in government securities but this didn't produce enough income so the board started using the funds for questionable loans, only to white men. At it's collapse, most depositors lost everything and the ones that received anything got around 20 cents on the dollar.

[Joe Keefhaver · Rating 4 out of 5]

I was unfamiliar with the story of the Freedman's Savings Bank, an institution founded to serve the formerly enslaved people of the U.S. after the Civil War. It was amazing to read about how diligent and industrious the freedmen were and how hard they worked to embrace the American Dream. Unfortunately, the Reconstruction Era was one of corruption and betrayal, and the deposits of these new citizens were stolen by rich white men who suffered no consequences.

[Joe Hall · Rating 5 out of 5]

Outstanding

This book drives home the point that income inequality and the racial wealth has a history that is embedded with the direction of governmental policies and racist actions directed against our ancestor’s ability to compete on a equal playing field in this nation. Read this book and be informed.

[Kiarag · Rating 5 out of 5]

This book to be as detailed and informative as it is read at a faster pace that I expected. I picked up this book as a clueless person and now I have more history and appreciation for those who fought for their freedom and for equality and fairness although as this book proves they were taken advantage of.

[Robbin Golden · Rating 4 out of 5]

I learned about a time in history that I didn't know much about. How sad for all the people who invested their savings and then got pennies on the dollar after being lied to and robbed of their life savings from greedy white capitalists, no make that opportunists.

[Daniel Farabaugh · Rating 5 out of 5]

An excellent account of the rise and fall of the Freedman's Bank. The author does a really good job of showing the obstacles faced by Black and the betrayal at the hands white America. It is especially telling that Black people were blamed for the failure that they had nothing to do with.

[Jeremy · Rating 3 out of 5]

Raises some interesting questions about the Freedman’s Bank and answers them in an interesting and thorough manner, but was a tough read with the amount of economic jargon that I wasn’t personally familiar with before reading.

[Megon · Rating 4 out of 5]

It was an interesting story, and well written.

[Joyce Schiff · Rating 3 out of 5]

Fascinating revelation about the way white bankers took advantage of black people after the civil war. Really sad history of what happened

[Lance · Rating 4 out of 5]

A fascinating account of a mostly unknown story. A bit "dry" in a few spots, but overall a solid read. If you like financial history, it's a must read.

[Brandon Davis · Rating 5 out of 5]

Excellent book on how Negro Generational wealth was stolen by the oppressors

[Brett Glasscock]

extremely evil history

[Angi Covey · Rating 3 out of 5]

This is heartbreaking and a story that many people do not know!

[Celeste · Rating 4 out of 5]

4.5 - totally worth the read to see how people were treated and banks were created again on the backs of the poor Black soldier.

[Josie · Rating 2 out of 5]

FINALLY FREE FROM READING THIS SLOP (Scathing review to come🤭🤭)

[Gail Johnson, Ph.D · Rating 5 out of 5]

A really good black history book on banking and financial responsibility. What happen with the "Freedman's Bank" in its nine years of operation (1865 to 1874) was a small taste and the beginning of the Great Depression. Greediness (dishonest wealth Luke 16: 9-16) and overstated or inflated bank records. Word of advice, it's not how much you make, it's how much you keep in the house piggy bank.