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In 1903, the year that Black Virginian Maggie Walker founded St. Luke's Bank in Richmond, it would have surprised a lot of men to see a woman spending time in the main lobby of a bank as a customer—let alone as a bank executive. While at the beginning of the 20th century, some larger banks in the North started to hire female tellers to specifically assist female customers, in the "ladies' rooms" of most Southern banks, affluent female patrons didn't get teller access. Instead, they had lounge areas for sewing and private booths for viewing the contents of safety deposit boxes. St. Luke's Bank became Richmond's fourth Black bank —True Reformers Savings Bank's was the city's oldest and the largest—but in 1904 most Black Richmonders' money was still stored either in white banks or under their mattresses. Black Southerners still reeled from the collapse of the Freedman's Bank, a federally chartered bank for Black veterans and formerly enslaved people that went bust in 1874 because of the all-white management team's self-dealing and unwise investments. For Walker, St. Luke's Bank was a chance to build wealth for Black women—to take their "nickels and turn them into dollars" by investing their savings in profit-making and job-creating Black businesses.

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Walker was born Maggie Lena Draper in Richmond, Virginia in 1864, to Elizabeth Draper, a formerly enslaved Black woman, and Eccles Cuthbert, a white man and former Confederate Soldier who reported on the American South for The New York Herald. While the circumstances surrounding Walker's birth aren't well recorded, historian Shennette Garrett-Scott reveals one anecdote that certainly says something about Cuthbert and Draper's relationship: in 1883, when Maggie graduated from Richmond's Armstrong Colored Normal School, Cuthbert sent her a new dress, which Draper promptly lit on fire.

Maggie Walker in her office in the St. Luke building.

Walker became a school teacher, but was forced to quit her job when she married in 1886: Virginia state law prohibited married women from teaching. Maggie Walker's husband belonged to a wealthy Black family—the owners of brick contracting company—but she had ambitions of her own. She was tireless in pursuing improvement for her community, and a position of leadership for herself within it. She started selling insurance for Women's Union and began organizing for the Independent Order of St. Luke's (IOSL), a charitable, fraternal and insurance-providing organization. IOSL had spawned from an earlier fraternal organization founded in 1867 by another Black woman, Baltimore resident Mary Anne Prout, but by 1899, IOSL was in deep trouble: after nearly three decades of mismanagement by William Forrester, it had lost nearly two-thirds of its 2,500 members. In a major "glass cliff" moment—women seemingly only offered leadership positions when the risk of failure is unusually high—Walker was elected to head IOSL. Instead of falling from the cliff, Walker led the IOSL until her death in 1934, growing the organization eighty-fold to 70,000 members.

IOSL and St. Luke's Bank were closely linked: IOSL sold insurance plans to its members, engaged in charity work, and issued a newspaper, the St. Luke's Herald, while St. Luke's Bank accepted deposits and lent to Black families and businesses along with IOSL chapters. St. Luke's Bank was America's first and only bank run by Black women, and while many Black banks and fraternal organizations of the era positioned themselves as squarely and respectably middle class, St. Luke's built solidarity between Black working and middle classes, counting as its members and shareholders washerwomen, tobacco workers, and domestic workers along with nurses, teachers, and entrepreneurs.  

In a major "glass cliff" moment, Walker was elected to head IOSL. Instead of falling from the cliff, Walker led the IOSL until her death in 1934, growing the organization eighty-fold to 70,000 members.

Garrett-Scott tells the history of St. Luke's Bank and the IOSL in her new book, "Banking on Freedom: Black Women in Finance Before the New Deal." More than a century after St. Luke's founding, women and Black Americans still make up a tiny sliver of top management at banks. Maggie Walker was the first Black member of the Virginia Bankers Association; today, the Executive Committee of the Virginia Bankers Association is made up entirely of white men, and across companies like JP Morgan, Morgan Stanley, and Goldman Sachs, less than 4 percent of executives are Black. Meanwhile, Americans are broadly dissatisfied with the financial services industry; only 52 percent trust their bank to do the right thing. It's clear that the lack of race and gender diversity in banking isn't a good thing, if for no other reason than that it's hard to imagine closing the racial wealth gap if Black Americans are largely shut out of banking, one of the nation's most lucrative professions. What's harder to assess is how much better of a job banks would do at building wealth for their Black, Latinx, and female customers if they weren't managed mostly by white men. Garrett-Scott's accounting in Banking on Freedom is a glimpse into what banking institutions could look like with Black women at the helm.

St. Luke's Bank uplifted Black women through a style of banking that was deeply personal, even for its era.

The contemporary logic of banking normally assumes the best way to end racial prejudice and to ensure equal opportunity is to depersonalize everything. People hold biases, the thinking goes, but algorithms don'—-or at least the decisions made by algorithms are routine and predictable, and hence can be scrutinized for bias, as demonstrated by recent scholarship on racist algorithms in search engines and lending practices. But St. Luke's Bank uplifted Black women through a style of banking that was deeply personal, even for its era. Every loan required at least one co-signer who would take over the loan if the original borrower couldn't repay, and most loans had several—not just spouses or family members, but commonly friends, business associates, and fellow members of fraternal organizations. In this highly communal system, maintaining good relationships was critical. Black women from every economic station ascended into leadership positions within IOSL; those that did received favorable consideration when they applied for loans, and rank-and-file members could still reference their timely payment of IOSL dues to support their creditworthiness. "A borrower's moral character, work ethic and community associations rather than income and employment often determined whether or not to extend a loan," writes Garrett-Scott.

Maggie Walker was the first Black member of the Virginia Bankers Association; today, the Executive Committee of the Virginia Bankers Association is made up entirely of white men, and across companies like JP Morgan, Morgan Stanley, and Goldman Sachs, less than 4 percent of executives are Black.

St. Luke's would rely on the local councils of the IOSL to help conduct research into the reliability of loan applicants. IOSL's more than 500 hundred councils, which spanned both northern and southern states, were made up of Black men and women from every walk of life; some of the local leaders were hired, appointed and paid by the head office in Richmond, while other leaders were elected by the individual council's membership. Councils performed community service and maintained records of dues-paying and meeting attendance. Committed council members would be invited to advance in the "degree" system—there were 9 possible ranks in total—with progression marked in secretive, elaborate ceremonies. Members could file complaints against one another to the local council's grievance committee. The councils would report back to St. Luke's Bank which "degrees" an applicant had obtained, their track record of attending meetings and paying dues, along with providing more subjective judgements on the applicant's social and financial standing.

The entrance to the St. Luke Penny Savings Bank with staff.

St. Luke's highly personalized banking is radically different than most Americans' experiences with banking today, where credit decisions for nearly all loans smaller than mortgages are made on a fully automated basis. Even if we wearily accept the mass collection of our data by big tech companies, a lot of people would probably object if Chase or Wells Fargo called up our acquaintances and asked them to weigh in on whether we're good people or not, divulging some information about our loan application in the process. Some startups and tech companies are trying to "repersonalize" lending by bringing back the idea of using social networks in making credit decisions, but the modern-day reincarnation looks very different from St. Luke's Bank. St. Luke's Black female borrowers generally occupied the bottom of the social and economic hierarchy in the Jim Crow South—while St. Luke's evaluated social information in the context of lending decisions, it did so with a scorecard that was very different than the one traditionally imposed on women of color. White banks evaluated Black women as inherently risky, unintelligent, and prone to disease; they put no stock in the community ties that strengthened Black neighborhoods, and they discounted the value of collateral owned by Black families, given that white ownership made land and property more valuable. Because St. Luke's Bank was tied closely to a fraternal organization that counted both washerwomen and doctors as members, it made possible the idea that social connections could signify something greater than inherited class privilege. By contrast, contemporary proposals to use borrowers' social networks seem likely to just amplify and entrench existing inequalities. A failed proposal by Facebook to approve or decline loans based on the average credit scores of a borrower's Facebook friends would almost certainly harm anyone whose community is under-resourced or "redlined" as high risk—particularly people of color and those experiencing generational poverty. If Walker was launching a so-called "fintech" startup today, it might consider whether you volunteer, give to charity, or babysit for your neighbors to assess your reliability, instead of where you went to college, or what your parents do for a living. After all, a study by researchers at U.C. Berkeley and found that the higher a person's social rank, the more likely they were to steal from a candy jar that was labeled as being for children.

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Although Walker exerted a strong top-down leadership—her employees bristled at the strict and conservative dress code, and the near daily lectures on "commitment and proper conduct"—St. Luke's employed a highly consensus-driven model of decision-making, particularly when it came to loan underwriting. At St. Luke's, every loan was initially vetted by a three-person committee and then voted on by the bank's board. By comparison, other banks of the era would make decisions based either on standardized rules, or largely at the discretion of a single underwriter. Garrett-Scott argues that St. Luke's laborious and "gendered" economic practice of consensus decision-making likely saved the bank during the Great Depression—the extra people at the table improved the average quality of loans granted.

At work in the stenographer's office of the St. Luke building.

Nevertheless, the radical potential of St. Luke's—and probably the potential for all banks of both the early 20th century and our present moment—was constrained by the brutal challenges of lending to the poor while covering costs. Walker planned St. Luke's to benefit working Black women, but to survive St. Luke's needed adequate capital reserves, which meant turning at least a small profit on most of its activities. Success of a bank was by no means guaranteed—both Black and white banks regularly failed in the 19th and early 20th centuries in the era before federal deposit insurance, and as Garrett-Scott records, Black banks were subject to extraordinary scrutiny by regulators, who audited every Black bank in Virginia even as they audited only half of the total banks in the state. A bank that regulators didn't think would be solvent in the future could quickly get placed under receivership, a fate that befell True Reformers in 1910. Turning a profit for St. Luke's meant aggressively pursuing delinquent borrowers, hiring debt collectors to knock on doors, and contacting borrower's employers to secure paycheck deductions. St. Luke's avoided using the courts to collect on debts, well-aware of the physical dangers to their borrowers that came with police and government intervention, but as Garrett-Scott notes, St. Luke's wasn't above the use of public humiliation when they publicized the names of past-due borrowers.

Garrett-Scott argues that St. Luke's laborious and "gendered" economic practice of consensus decision-making likely saved the bank during the Great Depression—the extra people at the table improved the average quality of loans granted.

"Banking on Freedom" centers a genius and visionary woman who created good jobs in banking for more than one hundred other Black women. St. Luke's not only survived the Great Depression, it emerged strong enough to absorb Richmond's only two other surviving Black banks; Walker was the chair of the board the newly formed Consolidated Bank until her death in 1934, and Consolidated remained a Black-owned bank under different names into the 21st century. At least 600 of St. Luke's customers had paid off their home mortgages in full by the early 1920s, and Virginia came to have one of the highest rates of Black homeownership in the country. St. Luke's loans even facilitated the Harlem Renaissance, financing many of the first Black entrepreneurs to buy apartment complexes in uptown Manhattan. Garrett-Scott's accounting is a work of economic history, but it reads less as a description of 20th century Black capitalism, and more as a rendering of what is possible when women and people of color can effectively channel their own money for personal and collective economic development. One painting that hung at the IOSL read, "benefits for all in the march for success:" While it doesn't always feel like the march is continuing forward, Walker's accomplishments certainly makes it feel worthwhile to keep trying.

Banking on Freedom: Black Women in U.S. Finance Before the New Deal. By Shennette Garrett-Scott. New York: Columbia University Press, 2019. $105 (hardcover); $35 (paper).

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Elena Botella

Elena Botella is a writer interested in the ethics and problems of banking and capitalism. She’s currently traveling the United States to interview Americans about their experiences with debt. Elena is from Charlotte, North Carolina, and is now based in Washington, D.C. Follow her on Twitter: @elenabotella.