The #Freedmen’s Savings and Trust Company, commonly referred to as The Freedmen’s Bank, was incorporated on March 3, 1865. It was created by the United States Congress along with the Freedmen’s Bureau to aid the freedmen in their transition from #slavery to freedom. During 1861, many #black Americans along border-states were utilizing their freedom and seeking help with understanding how to save money. So, most of them put their hard earned money into the hands of the Freedmen’s Savings and Trust bank. The purpose of the bank was to teach free slaves how to save money for the future, to be thrifty and to be productive citizens.
Several years before the origin of the Freedman’s Bank, the black soldiers of the Civil War had been saving their monies in the Saving Bank of Baltimore, which had been established in the 1818. This took place through an allotment system supervised by officers of the regiment. During the Civil War, small banks were established across the South to receive deposits from black soldiers and runaway slaves working at Union garrisons. The Freedman’s Saving Bank seemingly operated well. In 1870, the change to its policy of dealing with loans and investments began to create economic problems that caused a dilemma within the bank financial structure.
Frederick Douglass joined the bank as its president in 1874 to boost the morale of the depositors. He soon realized that the bank was in trouble and could not survive. He recommended to Congress that the bank should close. Congress passed an act to authorize the trustees to close the bank. Many of the records of these deposits were lost, however, and many of the freedmen were prevented from recovering their deposits. Also, when black troops were killed in combat and did not list next-of-kin, their deposits went unclaimed as well. It is estimated that 3 million dollars belonging to 61,000 African Americans vanished when the Freedman’s Savings and Trust Company failed in 1874.