Savings and Trust

Starred review from September 9, 2024
America’s racial wealth gap can be traced to the collapse of the Freedman’s Savings and Trust Company in 1874, according to this ingenious work of financial sleuthing. Historian Hill Edwards (Unfree Markets) shows that the bank—which canvassed the post-war South to encourage freed people to deposit their money, and at its height held more than $75 million in deposits ($1.9 trillion in today’s dollars)—underwent an “ideological change” within two years of its 1865 founding, when it moved in 1867 from New York to Washington D.C., and Henry D. Cooke, brother of industrialist Jay Cooke, joined the Board of Trustees. Cooke immediately set about “raid” Black depositors’ money to make illegal loans to bank trustees and risky, influence-peddling investments, including extravagant loans to politicians. By 1870, whiffs of the bank’s insolvency and corruption had reached the public. In a captivating narrative that reads like a slow-burn legal thriller, Hill Edwards proves how, in a particularly perfidious last-minute effort to salvage the faith of Black depositors, the bank’s white trustees elected a “completely unprepared” Frederick Douglass to serve as president just three months before the bank’s collapse, permanently scarring the orator’s legacy. The result is a revelatory connecting-of-the-dots between the failure of Reconstruction and the birth of the Gilded Age.