By Ryan Velez
The story of Black banking in this country is not much unlike other parts of our history—in that it is an unpleasant one and still has ramifications today. Make Change recently did an interview with Professor Mehrsa Baradaran, author of The Color of Money: Black Banks and the Racial Wealth Gap. Here are some choice excerpts from the interview.
Perhaps the most horrific story in the history, which hasn’t been told in most history classes, is about the Freedman’s Savings Bank. “The Freedmen’s Bureau was created by [President Abraham] Lincoln. It was meant to help freed slaves transition into capitalism. You’ve gone from being capital to becoming capitalists. So you have to get wages for your employment and transition into the populous. Everything, basically, that is meant to alleviate the transition ends up getting vetoed by [Andrew] Johnson after President Lincoln is assassinated,” she explains.
“So 40 acres and a mule, labor protections against exploitation, all of that stuff is vetoed. The Freedmen’s Bureau ends up becoming this failed effort. And the reason it’s a failed effort is because the South sort of violently overthrew their efforts.
The one thing that survives Johnson’s veto is this Freeman’s Savings Bank. The thinking here is ‘we’re not going to give you land because that becomes politically impossible. But we’re going to give you a savings account, and you’re going to save up your wages and buy land yourself.” However, the bank had a private president, at a time where federal banking was in its infancy. The result is that he invested it in railroads futures, which went bust. Black people got around 40% of their initial deposits.
She then fast-forwarded to the 1970s and how Nixon created the apparent myth of Black capitalism, at least, in his context. “You meditate on black capitalism as it was used in his administration…as a decoy to defang what was going on in terms of black power, and to make the whites comfortable that we’re “doing something.” We’re really doing very little,” explains Make Change.
“This idea is that it’s taking the fangs out of Black Power but also the civil rights movement that King was starting, this poor peoples’ movement. This idea is that we’ve just gone the first step in civil rights. Now we’ve got to address economic injustices, and we’ve got to come up with these programs,” says Baradaran.
“It takes the rhetoric of the Black Power Movement which was saying we want black ownership. But what they meant is political ownership and capital and a real stake in capitalism. Nixon subverts it and says, ‘you’re going to own businesses, and you’re going to own this problem of poverty,’ and this pivot point is crucial, and I think understudied and under-discussed.” The reasoning is that its vague enough that the government could seem like they are doing something, while the end results are little.