Historical Spotlight: Capital Savings Bank
Power is often determined by financial strength in society. The famous saying, “Money talks” has always been a way to justify special privileges just based on a person’s wealth. For centuries, Black Americans were denied the liberties to make their own money, buy property, operate businesses, and were even forced to pay different prices just because of their skin tone. Join me as we shine a Historical Spotlight on Capital Savings Bank, the very first Black-owned bank in the United States.
For centuries, Black Americans were shut out of wealth due to slavery. Since they were considered property, slaves didn’t even get to see or enjoy the fruit of their hard, unjustified labor. As time went on and society slowly changed, sharecropping, segregation, redlining, and discrimination continued to make it difficult for most Black families to earn a comfortable living.
Entrepreneurs had to get creative and develop businesses like barbershops, grocery stores, bakeries, and others to keep the lights on. Most of the time, if a Black person wanted to open a brick and mortar business, they would have to go into subprime debt with a white lender just to get the backing needed to operate. Interest rates were high and they were often discriminated against and flat out denied for business loans.
It was important for the community to rely on itself and develop the institutions, network, and support for aspiring business owners to thrive. On October 17, 1888, Capital Savings Bank was founded in Washington, D.C. and became the very first bank organized and operated by Black Americans.
The bank quickly became a vital resource by offering loans to Black-owned businesses and landowners in the area. It helped support and stimulate Black entrepreneurship because it was recognized as a legitimate organization that worked for the betterment of the group. By 1892, deposits were estimated at $300,000, which was a significant amount of money and can be compared to over $10.6 million in today’s terms.
It had a strong enough backing to withstand the Panic of 1893, an economic depression that lasted eight months and was the most serious depression up until the Great Depression in the 1930s. It caused over 15,000 companies and 500 banks to close their doors and many people lost their entire life savings. However, Capital Savings Bank relied on the trust built up in the community to withstand the panic and continue operations.
Capital Savings Bank officially closed in 1902 and has been honored over the years as a designated historic D.C. landmark. Over the course of its short operation, it was the model for other Black-owned banks across the country and inspired much needed economic growth in the Black community.
134 Black banks were opened between 1888 and 1934 after witnessing the success of Capital Savings. The increased capital available to aspiring investors and entrepreneurs increased the number of Black businesses from 4,000 to 50,000 between 1867 and 1917. Of course, World War I thwarted Black Americans’ progress especially once national focus shifted to providing jobs and resources for the war.
The bank was a direct solution to the rampant discrimination faced by the Black community. White-owned banks and lenders refused to make deals, so the Black community came together behind Capital Savings Bank as a way to accumulate wealth and reap the benefits of collective financial security. In a way, it showcased and provided a tangible example of how we’re stronger together.
The Free African Society, the Free Labor Bank, and the Freedman’s Savings and Trust Company were the original trailblazers of Black capitalism in America, but Capital Savings Bank gave Black people an actual institution to learn about and participate in the business of banking. It was inclusive to all social classes so everyone could learn the valuable economic benefits of seeking employment, saving money, and purchasing homes.
Black churches and frat organizations in the area provided the initial pooling places for the capital needed to open a bank specifically for Black people. Many in the community understood the need to build up resources that weren’t dependent on the dominant society during segregation. The founding of Black-owned banks, insurance companies, newspapers, and other businesses during this time in history led to the founding of entire Black-owned cities like Tulsa and Oscarville.
Opening a sustainable Black-owned bank was an amazing accomplishment for our ancestors. It’s important that we don’t let their hard work go to waste and that we remember the importance of building up our community with resources. At the end of the day, if it’s Black-owned, no one can take away what you’ve built and the life lessons you’ve gained from doing the hard, but much needed, work.
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Signed,
Jessica Marie
