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"Waiting"
A debt that the Republican party ought to wipe out.
This Harper’s Weekly cartoon by Thomas Nast is set over 20
years in the future (1900), and features a weary, old black man—"the
last poor depositor"— clinging patiently to the hope that his
embezzled savings will be returned to him.
In March 1865, shortly before the end of the Civil War, Congress
chartered the Freedmen’s Savings and Trust Company, commonly called
the Freedmen’s Savings Bank. The white-abolitionist owners aimed to
encourage the newly-freed slaves to set aside a portion of their wages
by giving them a financial institution they could trust. In its various
branches, black men sat upon its advisory boards and were hired as bank
tellers. Over 100,000 black individuals, families, churches, charities,
and societies deposited a total of $57,000,000 with the Freedmen’s
Savings Bank, although most accounts were under $50.
In the early 1870s, the bank directors began making speculative
investments in Washington, D.C., real estate and providing substantial,
unsecured loans to railroad and other business firms. Jay Cooke,
president of the Northern Pacific Railroad Company, for example,
borrowed $500,000 on favorable terms. Other loans were handed out to
friends, political cronies, and allegedly even to members of the Ku Klux
Klan (as Thomas Nast pictures in another cartoon), all of which
undermined the bank's reserves. Embezzlement schemes occurred at several
bank branches.
Already overextended, the onset of an economic depression in 1873 was
the fatal blow to the bank. In an attempt to save it, Frederick
Douglass, the esteemed black leader, was appointed bank president and
convinced to deposit $10,000 of his money in the institution as a show
of good faith. Nevertheless, the Freedmen’s Savings Bank failed in
June 1874, with only $31,000 to reimburse the remaining 61,000
depositors. The average loss was $20 per customer.
The Freedmen’s Savings Bank was a private corporation, but it had
benefited from an assumption that it was affiliated with the Freedmen’s
Bureau, an agency of the federal government. Customers were solicited by
army officers and by advertisements displaying the authoritative image
of Abraham Lincoln. Several American presidents called for the federal
government to repay the lost deposits, but successive Congresses
refused. Half of the depositors eventually got back about three-fifths
of their accounts. As this cartoon accurately predicts, some depositors
desperately appealed to the federal government for their funds even into
the twentieth century.
Robert C. Kennedy
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