Bank approves $5 million to make amends
Predecessors took slaves as collateral
By NED RANDOLPH
Advocate business writer
JP Morgan Chase, which acquired Bank One last year, is creating a $5 million college scholarship fund in Louisiana to make amends for the role that two of its predecessor banks once played in the slave trade in the state, company officials said Thursday.
In its merger with Bank One, JP Morgan Chase acquired assets from two defunct New Orleans-area banks -- Citizens Bank and Canal Bank -- that had accepted slaves as collateral on loans from plantation owners in the 1800s, Bank One regional spokesman Chris Spencer said.
In a letter to JP Morgan Chase's 120,000 employees, the company's top two officers apologized Thursday for the slavery-era activities of the two banks.
The disclosure was prompted by a 2003 Chicago ordinance requiring companies doing business with the city to publicize any past profiteering from slavery.
"This is monumental because it opens up a new discussion for the American public to openly address slavery and the institutions that profited from the slave trade," Kwame Ashante, president of the Louisiana NAACP, said Thursday in reaction to the disclosure.
"Many people had not looked at slavery as a profit-making entity and the institutions it created -- from insurance houses to brokerage houses to banking and shipping companies -- that became a foundation for the American way of life."
Legalized slavery, which persisted for 245 years, was abolished in 1865 by the 13th Amendment. Yet black Americans were treated by law as second-class citizens up until 1954 when the U.S. Supreme Court abolished the "separate but equal" doctrine in Brown v. The Board of Education that began to unravel the Jim Crow-era laws.
JP Morgan Chase, which searched records of the 300 predecessor banks it has acquired, finished its evaluation this week and filed the Economic Disclosure Report with Chicago on Thursday.
Between 1831 and 1866, Canal Bank and Citizens Bank accepted 13,000 slaves as collateral on loans and repossessed 1,250 enslaved individuals on loans that plantation owners defaulted on around the state, including the parishes of East Baton Rouge, West Baton Rouge and Ascension.
The Chicago filing lists some Louisiana landowners by name as well as the enslaved.
Spencer said he believes this is the first effort by a U.S. company to redress the wrongs of slavery.
"Slavery was a brutal and unjust institution," the letter to JP Morgan employees states. "We apologize to the African-American community, particularly those who are descendants of slaves, and to the rest of the American public for the role that Citizens Bank and Canal Bank played. The slavery era was a tragic time in U.S. history and our company's history," company executives said in the letter.
It was signed by the company's chairman and chief executive officer Bill Harrison and its president and chief operating officer Jamie Dimon.
JP Morgan Chase will provide $5 million over five years for full-tuition, undergraduate scholarships to black Louisiana students that attend college in-state.
Citizens Bank was founded in 1831 and merged with Canal Bank in 1924. When that institution failed in 1933, it was placed in liquidation by the U.S. government.
In May 1933, Canal Bank's deposits were placed in a new, federally chartered bank, called The National Bank of Commerce in New Orleans, later known as First National Bank of Commerce. It was purchased by Bank One in 1998, Spencer said.
Bank One and JP Morgan Chase merged in July.
New York-based Chase Bank had a separate interest in Canal Bank. In 1931, Chase led a group of investors and took a controlling management interest in Canal Bank.
Throughout the years, JP Morgan Chase has absorbed other banks that dealt with Canal Bank and other Southern banks, companies and individuals during the slavery-era. However, the two Louisiana banks were the only ones found to have used slaves as collateral on loans.
"We did what we thought was right. We had a commitment to disclose this information," Spencer said.
Congressman Richard Baker, R-Baton Rouge, said JP Morgan Chase approached him about the the scholarship proposal, which will be modeled after the company's "Smart Start" minority scholarship program in New York.
Baker, who serves on the congressionnal financial services committee that oversees banks and other financial institutions, applauded the bank's disclosure. He pledged to work with the company to develop criteria for the scholarships.
"Clearly this is not a finding of fault by JP Morgan Chase," Baker said. "This is merely saying you own an institution that was engaged in a practice we find unacceptable," he said.
"It certainly sets an important precedent."
A large portion of African-Americans believe some sort of reparation is owed -- similar to payment compensation to Jews enslaved during the Holocaust and Japanese Americans interned during World War II.
"Even still today reparations or compensations are being made available to the families of Holocaust victims, who had to work as slave labor for certain companies in Nazi Germany," said Rabbi Barry Weinstein with B'nai Israel Synagogue. "It's not exactly parallel, but the idea that compensations have been offered is nothing new historically."
Millions of Africans were herded onto American-bound slave ships from 1619 to the 1800s -- huge portions of which died during the months at sea.
"We can't even talk about whole numbers of African people who were dumped overboard or jumped -- or were massacred during periods of war that took place to get the people," Ashante, the Louisiana NAACP president, said.
"This country has yet to recognize the true value of the slave trade. We recognize the institutions that were created but not in the true cost that has been paid by the masses of African people in this country," he said.
JP Morgan Chase was sued by descendants of slaves in 2002, as part of a lawsuit against 18 companies. That suit was tossed out by a federal judge in January 2004.
Spencer said the bank's recent findings had nothing to do with that lawsuit.
The company's researchers spent 3,500 hours over six months and visited 41 parishes in Louisiana, Spencer said.