Two months after the Sherman order, Congress created the Freed-men’s Bureau and tasked it with transitioning former slaves to their new lives; part of the plan was to dole out the seized land. The Freed-men’s Bureau Act of 1865 formalized Sherman’s field order into a law “providing that each negro might have forty acres at a low price on long credit."38 The order came directly from President Lincoln, who wished to give freed slaves “an interest in the soil."39 The price of land was to be fixed at $1.25 per acre, 40 percent of which was due up front. The land was to be protected by the military until Congress could act to formalize land titles. Some families even received leftover army mules.40 It seemed that the government was about to create a black landowning class. In fact, during the Reconstruction era, racial equality was even contemplated. Black lawmakers and radical Republican allies like Thaddeus Stevens, Charles Sumner actively pursued full integration and equality.
Confiscating and breaking up the land meant destroying the slaveholder oligarchies that had controlled the Confederacy. The backlash was extreme and ruinous. Having contemplated a complete reordering of the South, and perhaps exactly because the stakes were so high, the Reconstruction revolution was violently overthrown. Ex-Confederates won back through violence, fraud, and coercion what they could not achieve through military victory or political process.41 The Ku Klux Klan became a para-military force in the South whose purpose was the overthrow of Republican government, black politicians, and any other activists not fully in line with the established antebellum order. According to Reconstruction historian Eric Foner, “the largest number of violent acts stemmed from disputes arising from black efforts to assert their freedom from control by their former masters.” Especially vulnerable were blacks who tried to purchase land.42 Reformists were assassinated, and black voters were harassed. As W. E. B. Du Bois explained, “Guerrilla raiding, the ever-present flickering after-flame of war, was spending its forces against the Negroes, and all the Southern land was awakening as from some wild dream to poverty and social revolution.”43
A postwar struggle was being waged over economic control of the South. The Freedmen’s Bureau could not survive the violence and chaos that followed Appomattox and thus promises of land and equality vanished.44 As Du Bois said of Reconstruction, “the slave went free; stood a brief moment in the sun; then moved back again toward slavery.”45
President Andrew Johnson, the accidental president who assumed office after Lincoln’s assassination, joined the white southern backlash and rolled back Lincoln’s promises. He thoroughly undermined the Freedmen’s Bureau bill, including the land grant, and fought the black rights movements, asserting that America would remain a “white man’s government.”46 Though the southern rebels had expected to be hanged for their treason, Johnson welcomed them back into the fold, pardoned them, and restored their confiscated land. The land General Sherman had given to freed slaves in Georgia was returned to the original owners before a full harvest season had elapsed.47 The effects were devastating for blacks. Had whites made good on this promise to blacks, claimed Du Bois, it “would have made a basis of real democracy in the United States.”48 Instead, the agents of the Freedmen’s Bureau went south to “tell the weeping freedmen, after their years of toil, that their land was not theirs, that there was a mistake—somewhere.”49
Union General Oliver Otis Howard, who had the unpleasant task of taking the land back from the freedmen after he had helped administer the order, nevertheless reasoned that the “freedmen should have land, but they . . . must pay for their land.”50 President Johnson said that the Freedmen’s bill was advantaging blacks over whites and that it was time for blacks to fend for themselves. “It is earnestly hoped that instead of wasting away, they will, by their own efforts, establish for themselves a condition of respectability and prosperity." Johnson claimed that the laws of capitalism and free trade would allow the freedmen to accumulate land without any special help from the state. He was confident that freed slaves would be able to choose their “own employment and their own places of abode" and insist on and receive “proper remuneration" for their work and further that the “laws that regulate supply and demand will maintain their force, and the wages of the laborer will be regulated thereby."51
It is important to pause and note that during this time the government was in the process of confiscating and distributing millions of acres of land for railroad expansion—a heavy government subsidy to a private enterprise. Banks were also being supported by public taxes in order to induce them to extend credit to the South.52 The Homestead Acts gave out millions of acres of government land to white settlers for years. The sheer scale of the land redistribution and its exclusion of blacks from the bounty was not the laissez-faire free market Johnson was describing.53 Blacks were denied land, not because the government was beholden to market rules, but because the government was controlled by political factions favoring the southern white elite, and giving blacks land was politically unpopular.
The myth that free-market principles were guiding political choices was further exposed as hypocrisy because blacks could not even pay “market prices" for land. White southerners simply refused to sell land to blacks. Land was sometimes sold at half the price to white buyers compared to what black buyers were offering just to avoid selling their land to blacks. Even when white landowners did not have sufficient resources to cultivate the land themselves, they still spurned black buyers.54 Southern states even passed laws that forbade white sellers to sell land to blacks.55 The abstract laws of supply and demand could not work when actual state laws excluded blacks from free markets.
The southern economy was anything but a free market. Prominent southern lawyers, legislators, and judges drafted laws that governed all aspects of black life and spurred racial bias across the South. These “black codes" prohibited blacks from property ownership, trade, testifying in courts, and voting. Blacks could not engage in commercial trades other than what they were conscripted to do. An 1865 South Carolina law declared that “no person of color shall pursue or practice the art, trade, or business of an artisan mechanic or shopkeeper, or any other trade, employment or business . . . on his own account and for his own benefit until he shall have obtained a license which shall be good for one year only."56 One black veteran remarked of these laws, “If you call this Freedom, what do you call Slavery?"57
By the end of the Reconstruction era, most freedmen were left landless, voteless, and with practically every profession blocked to them—their only choice was to grow cotton. Of course, that was the point. The world cotton market, headquartered in Great Britain, was heavily dependent on cheap and abundant cotton from the United States. The global web of cotton merchants that connected capital and trade through Liverpool, New York, Chicago, Paris, and Georgia had been closely following the turmoil of the Civil War. The moment the war ended, nervous cotton interests worked in local, state, and national courthouses and legislatures to restore a cotton-growing system as quickly as possible and as close to slavery as permissible. Across the globe, cotton traders and capitalists agreed that blacks needed to grow cotton. As Union general Frank C. Barlow put it in 1865 about his purchase of a southern plantation, “Making money there is a simple question of being able to make the darkies work."58 Some northerners had opposed the land redistribution efforts for the same reason. New York Democrat John W. Chandler argued that the land bill “leaves the culture of cotton, which is one of the main sources of national wealth, without security and without any certain prospect of improvement."59
For blacks, freedom had meant that they would be in control of their own economic destiny. For white capitalists, black freedom meant that blacks would be paid wages for growing cotton. These two interests and definitions of freedom were directly at odds. In order to make blacks continue to work at growing cotton, it was crucial that the freed slaves not be permitted to engage in subsistence farming. In other words, America could not go the way of Haiti. After Haitians led a successful slave revolt
against the French, the former slaves refused to grow sugar and output halted.60 They grew crops they could eat instead. Subsistence farming meant that a family would grow what they could live on, diversifying their crops, with some portion going for sale and some going for consumption. There was every reason to believe that American blacks would also go this route. After the war, in the fleeting moment of freedom, freed slaves had created societies of communal landownership and grew subsistence crops. In Edisto, South Carolina, for example, an independent society of freedmen consisting of 5,440 people cultivating 3,230 acres of land grew 33 percent cotton, 54 percent corn, and the rest in garden vegetables. The land was owned cooperatively and the profits from the harvest were shared.61 One South Carolina Bureau agent called the freed people’s land use “contrary to the laws of Nature and Civilization as I understand them.” He was appalled that they would be planting vegetables in the most productive cotton soil in the world.62 Some blacks rejected growing cotton because it was a “slave crop,” permanently associated with “the overseer, the driver and the lash.”63
The southern plantation economy could not function without cotton, and the cotton machine could not hum as it had before the war without exploiting black labor. A South Carolina planter said “the negro [is] the proper, legitimate and divinely ordained laborer of the South . . . [who] has become wild in the exuberance of his freedom . . . and will be trained to work as a free man. He cannot be permitted to become what he is in St. Domingo [Haiti].”64
Denying blacks landownership took care of the threat of subsistence farming, but black labor also had to be “induced” back to the cotton plantations. The South worked quickly to turn freedom into a legal technicality as opposed to an experienced economic reality. The black codes and compulsory work contracts took care of that by mandating constant and unrelenting work and punishing resisters through vagrancy laws.65 Work contracts forced blacks to stay on the plantation, and a contract breach, usually enforced through monetary damages, was punishable by violence, imprisonment, and loss of life.66 So coercive was this system of enforced labor that freedmen were prohibited in many states from hunting or fishing, which prevented them even from exploiting natural resources for survival.67
The criminal and legal system of the South was used to prevent the free movement of blacks in the market. Besides unrelenting cotton production, there were other forms of exploitation. The South’s burgeoning mining economy needed cheap labor, and southern entrepreneurs used the criminal justice system to re-enslave thousands of black men and work them, usually to death, in abhorrent labor camps.68 Having relied on unpaid black labor for so long, southern entrepreneurs designed the new system of convict leasing and continued to extract it. Blacks would be arrested under “vagrancy violations," which could be used to arrest any free black man in the course of doing any activity at all except working for a white landlord. Once arrested, these men would have a speedy trial, and within an average of seventy-two hours after arrest, be sold to a southern industrial mill to work in deplorable conditions for twelve hours a day mining coal or iron. Half of all labor prisoners died within the year they were arrested. Often, good laborers nearing the end of their term in the mines would be rearrested while still convicts, found guilty of taking too much food or clothing that belonged to a mine owner, and re-enslaved in the mine.69
Ostensibly, labor contracts were built on consent and free labor. But in reality, the black workers had no choice and could not, as Johnson had promised, determine their own employment and wages. Laws prohibited other employers from reaching out to blacks under contract and punished contract breach with physical violence. Wages were capped by law and by cabal between the employers. They were never much above subsistence, which further bound blacks to their employer.70 Black economic freedom was simply anathema to the profitable maintenance of the cotton market.
Freedmen wanted to control capital and have economic independence, but their former masters required them to work the fields. They could not be plantation labor if they had capital, which meant that they were prevented from accruing capital. Had they had land, they could not have been so easily conscripted back into cotton labor. Thus it was that in a few short years, most former slaves lived on the same plantations where they had been enslaved and went back to work, often with the same overseers, toiling the same hours on the same fields. James Baldwin called Reconstruction “a bargain between the North and South to this effect: We’ve liberated them from the land—and delivered them to the bosses."71 The only difference was that now blacks too were entangled in the cotton-debt empire just as the plantation owners had been. The economic order had remained virtually unchanged, and so too the lives of the freedmen.72
Moderate northern Republicans began to pivot away from the fight for racial equality and began to see equal citizenship as an end goal to be attained by blacks gradually over time through increased education, work, and the accumulation of property. Republicans began losing elections because of their support for black rights. They shed the liability and shifted toward pushing for sound money, lower taxes, and free-market capitalism. As they backed away from specific economic aid and land grants for blacks, Reconstruction collapsed. But even as reformers abandoned land and economic reform, they fought for civil rights for blacks in form if not in function. According to Du Bois, “the Freedmen’s Bureau died, and its child was the Fifteenth Amendment."73 However, because freedom was contained only in constitutional law and not experienced in the southern economy, these rights were hollow and vulnerable. The legal right to participate in democracy could not overcome the legal prohibition against engaging in the free market or the gaping gap in wealth.74
As Martin Luther King Jr. echoed a century later, “the Emancipation Proclamation freed the slave, a legal entity, but it failed to free the Negro, a person."75 This pattern would be repeated. This was just the first of several pivotal points in U.S. history when government reformers would choose to grant political rights instead of achieving real justice by addressing economic inequality. Indeed, it would happen to Dr. King’s own movement a century later.
Instead of land, freed slaves got rights that they could not use due to their economic and political status at the bottom rung of society. They also got a savings bank, which was another form of diversion that would be repeated in the next century. In fact, the most tangible and long-lasting, but historically overlooked aspects of the Freedmen’s Bureau was the bank it created. Even President Johnson, who voted to repeal the Freedmen’s Bureau and opposed every aid measure directed at blacks, including schools and job training, left the bank alone and never uttered a word of protest over it.76
The Freedmen’s Savings and Trust Company, also known as the Freedmen’s Savings Bank, was the first and only savings bank created by the federal government. Blacks had not asked for the bank, but land grants having been foreclosed by violence and southern retrenchment, the bank was a stand-in. The reformers promised the black community that the bank was the preferred and proper means by which they would achieve landownership on their own.77 The bank’s founder, John Alvord, said that the freedmen “have a passion for land," and the bank would provide the way. “Their notion of having land given to them by government is passing away, and we hear them saying, ‘We will work and save and buy for ourselves.’ ”78 Saving their wages in the bank was offered not only as the only way to buy land, but as the respectable and proper way of doing so.
Frederick Douglass celebrated the bank, stating that the “mission of the Freedmen’s Bank is to show our people the road to a share of the wealth and well-being of the world.”79 What the bank eventually did, according to Du Bois, was “not only ruine[d] thousands of colored men, but taught to thousands more a lesson of distrust which it will take them years to unlearn.”80
The genesis of the bank was in small military banks created during the Civil War to hold black soldiers’ wages. In Massachusetts, state authorities developed an “allotment system” already in use for white sold
iers to place black soldiers’ funds into an account to be distributed to family members. In 1864, General N. P. Banks established the first bank for black soldiers in New Orleans, called the Free Labor Bank. One regiment, called the “Rost Host Colony,” deposited around $20,000 into the bank. Soon after, other military banks for blacks opened. These banks, located in New Orleans, South Carolina, and Virginia, were among the first banks organized for blacks, and were immediately trusted by their depositors because of their alliance with the military.81
After the war, there was about $200,000 of unclaimed funds in these banks, deposits from black soldiers who had died during the war. John W. Alvord, an abolitionist minister and army chaplain, encouraged Congress to use these funds to incorporate a bank for freed blacks in conjunction with the Freedmen’s Bureau.82 The Freedmen’s Savings Bank and Trust Company was approved by Congress and signed into law by President Lincoln on March 3, 1865—the same day the Freedmen’s Bureau was created. The bill passed without opposition and was championed by reformers like Sumner and Alvord, neither of whom had any experience with finance or banking. With the exception of the First and Second Banks of the United States, which were no longer in operation by 1865, the Freedmen’s Bank was the only bank ever to have been chartered by Congress.
“This bank is just what the freedmen need,” said President Lincoln when he signed the Act.83 Pamphlets promoted the bank as “Abraham Lincoln’s Gift to the Colored People. . . . He gave Emancipation, and then this Savings Bank.”84 The bank was based on a popular new philanthropic banking model, savings banks for the poor, that had recently proliferated in the Northeast. These banks differed from commercial banks of the time because commercial banks made loans and speculative investments. The purpose of a savings bank was to hold money instead of growing it through lending. The charter of the Freedmen’s Bank was almost a copy of New York City’s Savings Bank charter. These banks were usually charitable institutions meant to teach “working men" the lessons of “thrift," “industry," and “care for the future." Congress described it as a teaching institution—to instruct freed slaves about American values, or “to instill into the minds of the untutored Africans lessons of sobriety, wisdom, and economy," values that were integral to “the economic and industrial development of a people."85
The Color of Money Page 3
