COVINGTON, La. -- Hired by J.P. Morgan Chase & Co., historian James Lide descended on this quiet hamlet last year and began digging into the 170-year-old records of Citizens Bank of Louisiana, a predecessor of the New York bank.
After 3,500 hours of research, he confirmed what his client didn't want to hear: Between 1834 and 1861, Citizens had secured loans with mortgages on land -- and thousands of slaves.
The leather-bound financial books also offered a remarkably detailed window into the financial dealings of plantation owners, most notably those of Bernard de Marigny, one of the richest men of the epoch, whose gambling habit catapulted at least 62 slaves into the bank's books as collateral for borrowed money.
"What he was doing was the modern-day equivalent of rolling over your credit-card debt," says Mr. Lide.
J.P. Morgan's unusual odyssey into the history of slavery began after Bank One, which it acquired last year, financed a bond issue for the city of Chicago in May 2003. The move triggered a city rule, called the Business, Corporate and Slavery Era Insurance Ordinance, that requires companies doing business with the city to disclose any ties to slavery.
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After months of research, Mr. Lide and his team submitted a detailed report to the bank, listing the slaves attached to the mortgages and the foreclosures that led to the Citizens' slave ownership, as well as those of another Louisiana bank of the era, New Orleans Canal & Banking Company. All in all, the two banks linked to J.P. Morgan used more than 13,000 slaves as collateral and wound up owning about 1,250 of them when borrowers defaulted.
J.P. Morgan responded swiftly, issuing a public apology for the actions of the two banks. It also established a $5 million scholarship fund for African-American students from Louisiana.
Financial attitudes to slavery generally resemble military policy toward homosexuality: don't ask, don't tell.
Kudos to the City of Chicago for asking and forcing the banks to tell.
