Freedmen's Savings Bank and Trust Company
A financial institution chartered by Congress in 1865 for the newly freed black population of former slave states, the Freedmen's Savings Bank was a key component of the African American struggle for equality and independence during Reconstruction. A total of thirty-three branches were established throughout the South; Tennessee branches were in Nashville (1865), Memphis (1865), Chattanooga (1868), and Columbia (1870). Although the majority of directors and upper management was white, blacks held trustee, cashier, and other positions. The banks required only a small deposit and gave up to 7 percent interest on savings, which permitted many poor black Tennesseans to save and gain financial footing. The Nashville branch generated the most capital, and by 1874 the Tennessee branches combined held over $155,000 in deposits.
In 1874 mismanagement and the financial panic of 1873-74 combined to close the Freedmen's Savings Bank. The depositors, most of whom were poor, received only a small percentage of their investment. Others lost substantial sums that brought about financial ruin. Various African American organizations and benevolent societies that had had holdings in the banks also suffered. Many who experienced considerable losses rushed to place blame on the more visible local black bank leaders rather than white officials. As a result, confidence in black-operated institutions was severely damaged. White reaction was largely unsympathetic and newspapers such as the Memphis Avalanche ridiculed the banks. Black-operated financial institutions did not reappear in Tennessee until 1890.
Published » December 25, 2009 | Last Updated » January 01, 2010