- Eye Opening
- Concrete Examples
The Underground Railroad was a network of freedom for those escaping enslavement in the 1800s. Lesser-known networks delivered financial assistance and vital information to enslaved people. After emancipation, community-based financial cooperatives provided economic support to Black Americans facing discrimination and segregation. Their inability to gain broad access to the US financial system yielded dividends that provide benefits today to Black Lives Matters protestors and other members of the Black community. Douglas Rushkoff’s article on Medium provides eye-opening information about mutual aid organizations and communal self-reliance.
- Mutual aid programs are longstanding elements of the Black community.
- Slavery and the Post-Civil War era sparked the need for Black economic cooperatives.
- W.E.B. Dubois provided exhaustive detail about the financial networks Black Americans created.
- Launched in 1907, The Mechanics and Farmers Bank and Insurance Company provided more than $200,000 in loans to 500 Black borrowers and farmers.
- The Black Lives Matter movement and other protest groups use historic mutual aid societies as models.
Mutual aid programs are longstanding elements of the Black community.
For hundreds of years, informal systems of mutual assistance and shared resources served as lifelines for Black Americans. Since the 18th century – and possibly earlier – the cruelty inflicted by slavery, segregation and white supremacy sparked mutual aid networks in the Black community. Often, survival depended on this network of finances, freedom, information and equipment.
The more Black people were shunned and segregated from the rest of the American society, the more they were forced to invent the kinds of circular economic and local reinvestment strategies the rest of us are discovering only now.
Evidence of these networks first emerged during slavery, according to the timeline featured in Collective Courage: A History of African American Cooperative Economic Thought and Practice, a comprehensive book by Jessica Gordon Nembhard, PhD, a professor at John Jay College of Criminal Justice.
Slavery and the Post-Civil War era sparked the need for Black economic cooperatives.
During slavery, Black people formed and used financial cooperatives to collect funds to buy freedom for individual slaves. The fundraising cooperatives became freedom networks in which liberated Black Americans would collect funds and save money to pay for enslaved people’s freedom, with instructions to pass along the freedom-funding efforts.
Black economic cooperativism began informally among slaves, who would collectively raise money to purchase someone’s freedom.
Information traveled along freedom networks. That’s how the Underground Railroad operated. Reliable information about hiding places and escape routes were vital currency. After emancipation, a variety of social and economic forces fostered conditions that necessitated the development of mutual aid societies in the Black community. Those factors included:
- The Homestead Act – Established in 1862, this act led to segregated, Black-only towns excluded from broader community finances and resources.
- Segregated labor unions – After the Civil War, labor unions enforced segregation and banned the formerly enslaved from their all-white labor groups.
- Lack of access to capital and employment – The absence of money and jobs prompted Black Americans to start their own businesses.
W.E.B. Dubois provided exhaustive detail about the financial networks Black Americans created.
The formerly enslaved scholar, author, journalist and activist W.E.B. Dubois provided vividly detailed, nuanced reports about how slaves pooled whatever financial resources they had to cover burial and medical costs for the members of their communities. These financial cooperatives were clandestine missions. People who had become literate, despite being in bondage, secretly maintained and hid the bookkeeping.
After the Civil War, the freed slave population was declared ineligible from memberships in white unions.”
Even after purchasing their freedom, formerly enslaved people still lacked rights and citizenship, and they turned to their community groups for loans and support. The Free African Society, based in Philadelphia in the 1780s, exemplifies the financial support groups that provided aid to emancipated people. Members paid monthly dues and tapped the support system when necessary.
Launched in 1907, The Mechanics and Farmers Bank and Insurance Company provided more than $200,000 in loans to 500 Black borrowers and farmers.
Even after slavery, mutual aid societies played a valuable role in the Black community. Launched in 1907, The Mechanics and Farmers Bank and Insurance Company served as the sole financial source for 500 Black borrowers and farmers. Black community members, including those who had jobs with Caucasian employers, regularly saved with the goal of investing those pooled funds in Black businesses. Within two decades, the Mechanics and Farmers Bank and Insurance Company provided more than $200,000 in small loans to financially strapped farmers and workers.
This is what we now call circular economics. Instead of extracting money from a community and delivering it to distant shareholders, money stays in the community, circulating through to whichever business needs it.
Financial networks operated in circular patterns in the Black community. Members invested funds in small community-based institutions; those funds circulated through neighborhood and participating businesses. Consider these practical examples of how mutual aid organizations worked within Black communities:
- Consumer support – By using a barber within the neighborhood, community members enabled the barber to pay back a mutual aid loan, which in turn enabled the organization to loan money to others.
- Bulk purchases – Neighborhood grocery stores formed purchasing blocks, enabling store owners to tap into lower wholesales prices through bulk purchases.
- Farm cooperatives – The Black Freedom Quilting Bee, for example, purchased nearly 25 acres of farmland. Sharing that land with farmers, the organization offered members use of a tractor – a piece of equipment none could buy individually – on a rotating daily schedule.
The success of community-driven networks sparked envy and violence from poor and working class whites. For example, Black workers from Tulsa, Oklahoma saved and invested their wages in community enterprises during the oil boom. Those deposits and investments led to the creation of “Black Wall Street” in the Greenwood section of Tulsa. Greenwood’s visible prosperity ignited rage and jealousy. White residents – with white police compliance – burned and destroyed Greenwood’s businesses on May 31, 1921. The white mob destroyed 10,000 homes in Greenwood and as many as 300 of Black residents.
The Black Lives Matter movement and other protest groups use historic mutual aid societies as models.
Even in the 21st century, the concept of mutual aid societies continues to attract support. For example, protestors from the Black Lives Matter movement and other civil rights advocacy groups turn to the National Bail Fund Network. As a non-profit source of bail money, this fund provides a pool of reusable bail money to individuals arrested during political protests.
With local businesses going under and stocks tanking anyway, why not invest what’s left of our savings into the restaurants, bookstores and barbershops we frequent, ourselves? We can apply rolling loans to getting one another out of debt.
On a financial level, support groups dating back to slavery and the Post-Civil War Era provide universal lessons for the larger society. These groups nourish self-reliance and an economic model in which communities of all races rely on their neighbors and friends for financial support, employment and investments. Rescue and financial delivery begin at home.
About the Author
Writer and columnist Douglas Rushkoff authored Team Human and Throwing Rocks at the Google Bus, and hosts the Team Human podcast.
This document is restricted to personal use only.