Banking History 101: Capital Savings Bank
by Mark Courts on 10/11/15
After
the demise of Freedman's Savings and Trust Company, it would take 14 years for
African Americans to rally behind another bank. The first bank organized and
operated by African Americans was Capital Savings Bank in Washington, D.C. Just
four years after it opened, its deposits had grown to over $300,000.
Capital Savings Bank provided the capital essential to the
growth of black businesses, capital that white-owned banks were unwilling to
lend. The community proudly deposited its money in Capital Savings Bank. The
public's confidence in Capital was rock solid in the early days, enabling the
bank to exert a strong, positive economic impact on the community it served.
During the Panic of 1893, the bank rode out the tide and was able to honor
every obligation on demand. Capital Savings Bank helped many African-American
businesses and property owners until it closed in 1902.
Early on, African Americans realized the necessity of
accumulating wealth and the subsequent benefits of collective financial
security. The Free African Society, the Free Labor Bank, and the Freedman's
Savings and Trust Company laid the groundwork for black capitalism in America.
Capital Savings Bank gave African Americans a venue in which to learn about and
participate in the business of banking. It was set up to reach all classes of
the community so that everyone could learn the valuable economic lessons of
being industrious, seeking employment, saving their money, and getting homes.
African-American churches and fraternal organizations built
further on that foundation by serving as pooling places for the capital needed
to open a bank that was sensitive to the needs of the African-American
community. Between 1888 and 1934, 134 black banks were established, while from
1867 through 1917, the number of black businesses increased from 4,000 to
50,000.
Source: Fedpartnership.gov
