In her thought-provoking book, Banking on Freedom, Shennette Garrett-Scott recognizes how much African American women in the early post–Civil War period possessed an “expansive vision of freedom”; moreover, they understood that having control over their own finances could help them achieve this freedom (p. 15). Yet in the Jim Crow era, huge obstacles to securing both political and financial freedom abounded. Garrett-Scott powerfully relates that some entrepreneurial black women, despite encountering rampant racism and sexism in the banking industry as well as in other facets of society, managed to create their own informal and formal financial institutions. Their efforts constitute an example of what Robert E. Wright, in Financial Exclusion: How Competition Can Fix a Broken System (2019), terms “discrimination-induced financial innovation” (p. 10). Garrett-Scott maintains that “as black women created, maintained, and used their own financial institutions and networks, they forged their own definitions of economic opportunity and citizenship” (p. 4).
While this important book highlights several black women in finance in the period from 1859 to 1929, its focal point is without doubt the charismatic Maggie Lena Walker, who served as president of the St. Luke Bank in Richmond, Virginia, from 1903 to 1929. To understand why Walker's leadership was so impactful (beyond the fact that she was the first black woman to run a bank in the United States), Garrett-Scott takes the story back to the early Civil War period, pinpointing the failures in the government's economic experiments with freedpeople's money. She systematically details the many flaws in the administration and design of the Freedmen's Fund (established in 1862 and run by chaplain John Eaton), the various free labor and military savings banks, and finally, the Freedman's Bank (founded in 1865 and lasting only until 1874). Garrett-Scott exposes the white paternalism, racist assumptions, exploitative practices, and overall plain mismanagement of these institutions. While some will be familiar with the general story of the rise and fall of the Freedman's Bank, Garrett-Scott focuses on a neglected aspect: its negative effects on black women. Recognizing that the names on the bank accounts often did not reflect true ownership, Garrett-Scott emphasizes that not just men but many women lost their savings when the bank toppled. She resuscitates some of their anguished voices as they pleaded for restitution. Even though a fund was established to help compensate victims, many had trouble recovering even some of their money. Garrett-Scott concludes that the Freedman's Bank and its predecessors “failed many black women and their families” and “undermined much of the economic autonomy that free black women had forged in the antebellum and earlier periods and that formerly enslaved women struggled to carve out in the post emancipation South” (pp. 39, 26). In the early emancipation era, black women, like black men, were, to borrow Garrett-Scott's title, “banking on freedom.” When the government-led banking ventures for freedpeople failed, African Americans like Maggie Walker endeavored to fill the void, just as others had done in the past.
Garrett-Scott stresses that “blacks were not unbanked” even when they were enslaved (p. 22). Sometimes they conducted financial transactions through formal banking institutions, but they also did so through their own informal organizations, such as mutual aid and secret societies (which were illegal). Not surprisingly, the same pattern of financial entrepreneurship prevailed after the Civil War. After the collapse of the Freedman's Bank, African Americans opened a flurry of banks—more than one hundred in the period from 1888 to 1930 (p. 6).
The roots of the St. Luke Bank extend even further back, to 1850s Maryland, when a free black woman, Mary Ann Prout, founded the St. Luke Society, nestling it within the Bethel African Methodist Episcopal Church. Organized originally to help women and children in distress, the society expanded in the late 1860s in reaction to the tumultuous dislocation of former slaves accompanying the Civil War's end. The society morphed into the Grand Order of St. Luke. Eventually, one piece of the organization splintered away to form the Independent Order of St. Luke (IOSL), which initially floundered under the inept leadership of William M. T. Forrester. In 1899, Walker, possessing a broad vision of what the bank should be, began to resuscitate it. In 1903, the IOSL opened the St. Luke Penny Bank in Richmond, Virginia, which Walker headed for decades. She also propelled the opening of the St. Luke Emporium, a department store that not only gave the local black community an alternative source of goods but also provided many African Americans (mostly women) with jobs.
The fact that the IOSL and the St. Luke Bank could persevere for so many decades under adverse, racist conditions and help so many people is a remarkable testimony to Walker's vision and commitment. As Garrett-Scott details, the bank's success was no foregone conclusion. While some white reformers supported the notion of a black-run bank, believing it would provide uplift, many white business owners felt threatened by its competitive presence. State regulators, meanwhile, subjected the bank to intense oversight. The St. Luke Bank survived, but at times, as Garrett-Scott herself acknowledges, it was dicey.
Devoted to the bank and its higher purpose, Walker had to make many compromises when encountering racism, sexism, and other injustices. Garrett-Scott excels in showing the fine line Walker and other black women in finance had to tread, deciding when it was wise to challenge societal mores and when it was best to work within the system. As Garrett-Scott writes, “From the perspective of black women themselves, financial institutions presented a means to both accommodate and challenge capitalist accumulation, sexism, and white supremacy” (p. 7). Notably, Walker decided not to have the bank challenge the residential color line; instead, the bank only granted mortgages to African Americans for properties in certain areas of Baltimore. At the same time, St. Luke Bank acted as an agent for change in other ways, such as by actively encouraging blacks to vote for black political candidates (p. 7).
In relating this history of Walker, the IOSL, and the St. Luke Bank, Garrett- Scott writes with authority, displaying a keen grasp of a wide swath of archival material as well as a strong command of relevant secondary literature. While some scholars had already begun to plumb these topics—see, for example, Elsa Barkley Brown's articles on Maggie Lena Walker in Signs (1989) and OAH Magazine of History (1993), as well as Gertrude Woodruff Marlowe's A Right Worthy Grand Mission: Maggie Lena Walker and the Quest for Black Economic Empowerment (2003)—Garrett-Scott provides an impressive depth and breadth of perspective that is enriching.
Perhaps what makes this book even more compelling is the author's own experience in banking, which provides her a valuable vantage point. Garrett-Scott had a front-row seat to the subprime lending frenzy, having worked as a loan processor for a mortgage banker that relied upon then prevalent lending tactics like adjustable-rate mortgages and very low down payments. She writes candidly, “What I did not realize until much later was that those high-interest, high loan-to-value loans we were peddling would destroy the dreams of the home buyers we believed we were helping” (p. 2). She discusses the racial and gender dynamics of the subprime crisis along with the stereotyping of the “subprime” borrower. Garrett-Scott utilizes the lens of the subprime saga to reflect upon the fact that this was “far from the first episode in which African-Americans—especially black women—grappled with the perils and promises of the financial industry in an effort to improve their lives” (p. 3).
Reflecting upon the book's title, Banking on Freedom, readers may finish the book contemplating what exactly the word “freedom” meant in the United States in the early post–Civil War period, and to whom. As historian Eric Foner has explored in several of his works, including the “The Meaning of Freedom in the Age of Emancipation” (Journal of American History [1994]), people's definition and understanding of that nebulous word, “freedom,” have often been wildly divergent and hotly contested. In the early emancipation era, according to Foner, freedom meant much more to African American women and men than “simply the absence of slavery”; it also meant, among other attributes, “economic autonomy” (pp. 453, 458). Garrett-Scott's book well proves this point, and it constitutes a stellar contribution to business history as well as women's history.
