Responsibility and Restitution in the Freedman's Bank Crisis

The Freedman's Savings Bank, founded in 1865, was established with the express purpose of providing safe banking access for newly freed black Americans. Despite a charter dedicated to low-risk banking, the boot-strap mythology expounded by Congress was undermined by rampant fraud. Nine years after its founding, the Bank folded, swallowing 1.2 million dollars in deposits (approximately 29.6 million today) spread among roughly 61,000 individuals. The Freedman's Bank offers policy makers and social justice advocates an under-explored opportunity. Despite the near universal recognition that the fault for the institution's collapse lies with Federal mismanagement, a majority of the deposits were never compensated. Both the power to restitute and the culpability rest with the same party. Further, the record keeping of the bank ensures reasonably clean lines of inheritance for compensation. Combined these factors make a return of Freedman's Savings deposits politically viable in the rhetoric of contemporary America. This article provides the historical and data research necessary to arm policy makers in the restitution of the victim's deposits. It is not the intention of this policy to supplant the more ambitious effort of reparations, but instead to build a rhetorical position squarely within the liberalist market tradition, which also mitigates harm.