Capitalism and the Color Line

W.E.B. Du Bois,
lookin' sharp.

So I'm about 1/3 of the way through The Souls of Black Folk (1903) by W.E.B. Du Bois. I became acquainted with the book in college, but until now have only ever read excerpts pertaining to the double-consciousness concept. I found and bought on a whim a paperback copy a few months ago, and—I'll admit—began reading it rather than Bleak House or The Landmark Thucydides because of the Ferguson eruption and the conversation swelling up around it.

Here's an except from the book's second chapter, which pertains to Emancipation, Reconstruction, and the successes and failures of the Freedmen's Bureau (bolds are mine):

Such was the dawn of Freedom; such was the work of the Freedmen’s Bureau, which, summed up in brief, may be epitomized thus: For some fifteen million dollars, beside the sums spent before 1865, and the dole of benevolent societies, this Bureau set going a system of free labor, established a beginning of peasant proprietorship, secured the recognition of black freedmen before courts of law, and founded the free common school in the South. On the other hand, it failed to begin the establishment of good-will between ex-masters and freedmen, to guard its work wholly from paternalistic methods which discouraged self-reliance, and to carry out to any considerable extent its implied promises to furnish the freedmen with land. Its successes were the result of hard work, supplemented by the aid of philanthropists and the eager striving of black men. Its failures were the result of bad local agents, the inherent difficulties of the work, and national neglect.

Such an institution, from its wide powers, great responsibilities, large control of moneys, and generally conspicuous position, was naturally open to repeated and bitter attack. It sustained a searching Congressional investigation at the instance of Fernando Wood in 1870. Its archives and few remaining functions were with blunt discourtesy transferred from Howard’s control, in his absence, to the supervision of Secretary of War Belknap in 1872, on the Secretary’s recommendation. Finally, in consequence of grave intimations of wrong-doing made by the Secretary and his subordinates, General Howard was court-martialed in 1874. In both of these trials the Commissioner of the Freedmen’s Bureau was officially exonerated from any wilful misdoing, and his work commended. Nevertheless, many unpleasant things were brought to light,——the methods of transacting the business of the Bureau were faulty; several cases of defalcation were proved, and other frauds strongly suspected; there were some business transactions which savored of dangerous speculation, if not dishonesty; and around it all lay the smirch of the Freedmen’s Bank.
 
Morally and practically, the Freedmen’s Bank was part of the Freedmen’s Bureau, although it had no legal connection with it. With the prestige of the government back of it, and a directing board of unusual respectability and national reputation, this banking institution had made a remarkable start in the development of that thrift among black folk which slavery had kept them from knowing. Then in one sad day came the crash,——all the hard-earned dollars of the freedmen disappeared; but that was the least of the loss,——all the faith in saving went too, and much of the faith in men; and that was a loss that a Nation which to-day sneers at Negro shiftlessness has never yet made good. Not even ten additional years of slavery could have done so much to throttle the thrift of the freedmen as the mismanagement and bankruptcy of the series of savings banks chartered by the Nation for their especial aid.

I have to confess that this whole chapter left me a little distressed by my ignorance of the Reconstruction period apart from its broadest themes. There was a lot of stuff I hadn't read or thought much about since high school history class, and there were a few things mentioned that I don't think were ever covered in my high school curriculum. One such item is the Freedmen's Bank.

Let's read a few snippets from blackpast.org regarding the Freedmen's Bank:

The Freedmen's Bank

The Freedmen’s Savings and Trust Company, commonly referred to as The Freedmen’s Bank, was incorporated on March 3, 1865. It was created by the United States Congress along with the Freedmen’s Bureau to aid the freedmen in their transition from slavery to freedom.

By late 1861, many black Americans along the border-states experienced a de facto freedom in the presence of occupying Union troops. Some found employment in Union garrisons where they were monetarily compensated for their work. At this time, northern abolitionists called for the creation of a freedmen’s bank to assist the ex-slaves in developing habits of financial responsibility.

John W. Alvord, a Congregational Minister and A. M. Sperry, an abolitionist, launched the Freedmen’s Savings and Trust Company in 1864 to eliminate individual bank mismanagement and bring all of the black deposits under central control in a single large institution. After Congress passed legislation incorporating the bank on March 3, 1865,  President Lincoln immediately signed the bill into law. Deposits were received only “by or on behalf of persons heretofore held in slavery in the United States, or their descendants.” Up to 7% interest was allowed for deposits, and any unclaimed accounts were to be pooled into a charitable fund that was used to educate the children of ex-slaves.

In 1868 the bank headquarters was moved to Washington, District of Columbia (D.C.), where black staffers were trained to take over its operations. At its peak, the bank operated 37 branches in seventeen states and the District of Columbia making it one of the first multi-state banks in the nation. By 1870 nearly all the local branches were run by African Americans.

By 1874, massive fraud among upper management and among the board of directors had taken its toll on the bank. Moreover, economic instability brought upon by the Panic of 1873 coupled with the bank’s rapid expansion proved disastrous. Hoping to revive the bank, Frederick Douglass, who was elected president in 1874, donated tens of thousands of dollars of his own money to shore up the declining institution. 

Although Douglass pleaded for Congress to intervene, on June 29, 1874, the bank was officially closed. At the date of closing $2,993,790.68 was due to 61,144 depositors. Mistakenly believing that the deposits were insured by the federal government, the bank's collapse left many African Americans cynical about the banking industry.

In various fora today are ongoing arguments about whether racial prejudice or economic inequality is the greater evil in American society and the root cause of the problem of which Ferguson is just another toxic apple. Not to discount the persistence of the color line in various areas of our national life, but I'm usually more inclined to say that economic inequality is the greater problem. Viewing the Freedmen's Bank episode through my Recession Generation lenses, how can I not be struck or fail to be surprised by the fact that the same kind of corruption and moneyed rapacity that push the acid up to my palate today were tentacle-fucking some of society's most vulnerable people 140 years ago more or less the same way they still tentacle-fuck them now?

But it is a powerful reminder that the problems of capitalism and the color line are too often and too profoundly intertwined to be treated independently in discussions about social injustice.