In the audiogram above, Edwards explains the promising beginnings of the Freedman’s Savings Bank for formerly enslaved people, their incredible economic power in the early years of Reconstruction, and the “chipping away at the bank’s benevolent foundations” that soon followed. In a profound betrayal of trust, white board members and politicians turned it from a savings bank for African Americans into an investment bank to serve white business partners, friends, and family of its white trustees.
Through this shift to investments and the economic depression known as the Panic of 1873, white financiers’ mismanagement and fraud caused the collapse of the Freedman’s Savings Bank in 1874. They lent and lost millions of dollars of freedpeoples’ deposited savings, devastating generations of African Americans and opening up an enormous racial wealth gap that endures today.
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