On March 3, 1865, The Freedmen’s Savings and Trust Company, commonly referred to as The Freedmen’s Bank, was created by the United States Congress to aid freedmen in their transition from slavery to freedom. During the bank’s existence, 37 branches were opened in 17 states and the District of Columbia, making it one of the first multi-state banks in the nation. According to The New York Post, the New York branch of the bank opened on August 13, 1866 in a building at the southwest corner of Bleecker Street and LaGuardia Place (then known as 1 Carroll Place) in the heart of what was then known as Little Africa in the South Village. By 1867, the bank moved down Bleecker Street to 183 Bleecker Street and then later 185 Bleecker Street; both buildings are no longer extant.
During the Civil War, small banks had been established across the South to serve black soldiers and runaway slaves working at Union garrisons. However, many of the deposit records were lost, preventing freedmen from recovering their deposits. Deposits also went unclaimed when black troops who were killed in combat had not listed a next-of-kin, or when their next-of-kin could not be located. The Freedmen’s Bank was created by John W. Alvord, a Congregational Minister, and A.M. Sperry, an abolitionist, to eliminate bank mismanagement and bring all black deposits under central control. Deposits could only be made by or on behalf of former slaves or their descendants and received up to 7% interest. Unclaimed accounts were pooled together to fund education for the children of ex-slaves. The bank headquarters were located in Washington D.C. and black staffers were trained to take over the bank’s operations. By 1870, nearly all the local branches were run by African Americans.
By 1874, fraud and economic instability had taken its toll on the bank. Frederick Douglass, who had been elected president of the bank in 1874, donated tens of thousands of dollars of his own money in attempt to revive the failing bank. Despite his efforts, the bank closed on June 29, 1874, leaving many African Americans cynical about the banking industry. After the bank failed, Congress established a program that made depositors eligible for up to 62% of what they were owed, however many never received even that much. Depositors and their descendants fought for decades for the money they were owed and for the government to assume some responsibility, but they were never compensated. John Mercer Langston, one of the bank’s black trustees, wrote in his 1894 autobiography, “Perhaps the failure of no institution in the country…has ever wrought larger disappointment and more disastrous results to those interested in its creation.”
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