"Postal Savings Behind the Scenes"
Speech of Hon. Carter B. Keene, Director of the United States Postal Savings System at the Banquet of the Investment Bankers Association of America at Denver, Colorado, Tuesday evening, September 21, 1915.
Mr. Toastmaster and Gentlemen:
I appreciate very highly your invitation to speak here to-night, also the words of commendation from your presiding officer. I have often wondered whether the fact that I am the only director of a big savings institution has anything to do with the ability of that institution to pay every depositor his money on demand. (Laughter and applause.)...
The toastmaster was wrong when he said that postal savings has nothing to do with investment bankers. We have a great deal to do with them. Indirectly, we are one of their best customers. More than ninety-four million dollars in bonds are now with the Treasurer of the United States as security for postal savings funds, and you gentlemen have largely supplied the banks with these bonds. Sixteen million dollars are in State and Territory bonds; city, town, and village bonds amount to forty-six millions; county bonds nine; miscellaneous bonds ten; and bonds of the United States Government and its dependencies thirteen....
Since I have been here this week I have heard billions and billions talked about.... I can hardly comprehend what a million is. But I want to tell you that in four and a half years the postal savings system of the United States has become custodian of sixty-eight million dollars, in cash, of the people's savings. Let me lay emphasis on the cash, because big figures do not always mean cash. Sixty-five million dollars of this money is on deposit in six thousand banks scattered throughout the country. In other words, practically all of the money we have collected has been released through the banks to channels of trade in the very localities where it originated. I am sure you will agree with me that this is a very creditable showing so far as dollars and cents are concerned.
The Federal Reserve Act, which went into effect on the 16th of November last, provided that postal savings funds should not be deposited in non-member banks. The Attorney General for the United States has held that the prohibition relates to funds received on and after November 16th. Therefore, postal savings on deposit in state institutions when the act became effective have been allowed to remain, except as it has been necessary to withdraw it to pay depositors.
The Post Office Department has made frequent investigations to determine where postal savings deposits come from; with the invariable result that they are found to come from chimney corners, mattresses, bootlegs, etc., but until very recently no effort has been made to ascertain where postal savings go when withdrawn. And this recent inquiry has been both gratifying and entertaining. It was found that in a vast majority of cases savings were withdrawn for very substantial reasons, prominent among them being payments on homes and the launching of small business enterprises. Occasionally a hospital bill was paid. Some depositors sent money to the old country to bring over a parent or a brother; a wedding trousseau here and there; and in Colorado we have record of a withdrawal to buy an automobile. (Laughter.)
I am glad to say that there has been a very great change in the attitude of the banks toward postal savings in the last few years. At the outset, many bankers thought that postal savings was an unwarranted invasion of the domain of private enterprise and that the service would prove a severe drain on their established business. The opposite has been the result. The tarnished coins and soiled currency that come into our postal depositories represent hidden savings—money that is beyond the reach of any corporate banking institution no matter how sound it may be or how conservatively managed. This newly discovered money has been made available for commercial purposes in the very cities and localities from which it was withdrawn, so instead of being a drain on corporate banking institutions postal savings has added to the deposits of some six thousand banks more than sixty-five millions. The bankers now freely admit that postal savings has been a help to them, and it is no uncommon thing for banks, especially in the mining regions of the West, to urge the Post Office Department to extend postal savings facilities in order that more money may be made available for local uses.
Among our 540,000 depositors every nation on the face of the earth is represented, also every conceivable occupation. The fisherman, the miner, the shoemaker, the preacher, the bank teller, the butcher, the baker, the candle-stick maker, all have accounts, but the great bulk of our deposits come from the men and women who work with their hands for a daily wage.
The foreign born are our most numerous and liberal patrons. An interesting poll of depositors has just been made by the Post Office Department and it was found that 59 per cent. of all postal savings depositors were born outside the United States, while the American born comprise 41 per cent. A still more surprising fact is that the foreign born own 72 per cent. of all the deposits. The Russians lead with $14,000,000 to their credit, or 20.7 per cent. Then follow the Italians with $9,650,000, or 14.2 per cent.; natives of Great Britain and her colonies with $6,000,000, or 8.8 per cent.; the Austrians with $5,900,000, or 8.7 per cent.; Hungarians, $2,900,000, or 4.3 per cent.; Germans, $2,800,000, or 4.1 per cent.; Swedes, $1,500,000, or 2.2 per cent.; and Greeks, $1,200,000, or 1.8 per cent.
What a splendid vote of confidence on the part of our foreign-born citizens in the good faith of the United States. And in these figures also is a high testimonial to the industry and frugality of our newly acquired citizens. That they should take most kindly to postal savings is not remarkable when we consider that they were accustomed to a similar service in their native countries....
Another thing that has induced foreigners to become postal savings depositors is the disastrous experiences many of them have had with so-called "private banks," usually operated by people of their own tongue. It is difficult to conceive of a more heinous crime than some of these so-called "bankers"—slick and persuasive—have committed in alluring credulous, hard-working men and women, to entrust their humble savings with them for the deliberate purpose of theft. I am glad to see that prosecuting officers have recently been aroused to the "private bank swindle" and that their promoters are getting the punishment they deserve.
When Europe got on fire last year, our postal savings receipts began to increase by leaps and bounds. During the fiscal year 1915, the deposits jumped from $43,440,000 to $65,680,000 and more than 140,000 new accounts were opened. The war still has an influence upon postal savings deposits, but the more immediate cause of large deposits at this time is the remarkable revival of commercial activities. Seven cities now have more than a million dollars on deposit, namely. New York, Brooklyn, Chicago, Boston, Detroit, San Francisco, and Portland, Oregon. Greater New York, including Brooklyn and several other offices in the municipality, now have over one-fourth of all the money in the Postal Savings System. During the past fiscal year New York City gained 200 per cent.; Bridgeport, Connecticut, 188 per cent.; Brooklyn, New York, 167 per cent.; Paterson, New Jersey, 162 per cent.; Jersey City, New Jersey, 122 per cent.; Detroit, Michigan, 112 per cent.; Newark, New Jersey, 100 per cent.; Akron, Ohio, 77 per cent.; Gary, Indiana, 66 per cent.; Pueblo, Colorado, 52 per cent.
Now, my friends, I come to a point that I hope will make an impression on your minds—a lasting impression—and that point is that the Postal Savings System from the first has been seriously handicapped by statutory restrictions on the amount that may be accepted. The law permits the acceptance of only one hundred dollars a month and five hundred dollars in all from a depositor. It has been shown that the foreign born are the largest patrons of our savings service and if this service is to reach its full measure of success we must recognize and respect the habits of the foreigner, and one of his habits is to save his money until he gets several hundred dollars together and then take the entire amount to the post office, just as he did in the old country. Because the postmaster cannot accept all that is offered, the intending depositor very frequently goes away in resentment and disappointment without depositing a dollar....
It is the testimony of postmasters from all over the country that they are rejecting about as much money as they are taking in. The Postmaster General last year recommended to Congress that one thousand dollars be accepted with interest and that another thousand dollars be accepted without interest, but for safekeeping. That was a practical and reasonable recommendation—one which would meet all requirements in ninety-five per cent. of the cases. Unfortunately the recommendation failed.... The Postmaster General has indicated that he will repeat the recommendation in his forthcoming annual report and I sincerely hope that Congress will promptly recognize the urgent need of the legislation. Millions of dollars, my friends, are spent every year by uplift societies for the betterment of the foreigners. These foreigners, these begrimed, hard-working foreigners, come to our post offices and ask us to take their humble savings. How unfortunate that we cannot accept what they offer, within reasonable bounds. What an effective agency this would be in bettering in a most practical and permanent way the conditions of the very people we want to Americanize as speedily as possible.
... We have five hundred and forty thousand depositors in the United States to-day and postal savings has a new and different story for each of them. It is not always the big things in life that change or fix our course. Can't you remember when a few dollars or the want of a few dollars tipped you one way or the other in some important matter. Who can estimate the happiness and prosperity that the starting of a postal savings account may lead to. It is a step, and an important one, in the right direction. Some one has well said that the immigrant who opens a postal savings account steps unconsciously on a moving platform; one thing leads to another, and his deposit might lead him into local investment and investment into business and into citizenship.
There is a very interesting human-interest side to postal savings in which every phase of good fortune and disaster is reflected. An aged couple at Norfolk without the knowledge of each other had been carrying $100 on their persons as a guaranty of respectable burial. They are now postal savings depositors. Two sisters died in each other's arms in the Eastland disaster in Chicago a few weeks ago—two working girls—and they had postal savings accounts for like amounts. Their savings went to pay for their burial. One of Uncle Sam's bluejackets who went down on the ill-fated submarine F-4 was the owner of a substantial postal savings account. Gentlemen, the Postal Savings System means something more than a cold array of assets and liabilities, a balance sheet. Way off in an isolated spot in Russia a money order went not long ago to the home of a humble peasant. That money order represented the savings of a son who was drowned in the Susquehanna River. A few weeks back, a thrifty Mexican girl withdrew her savings from the post office at San Diego, California, to buy a trousseau. After the honeymoon she returned to the office with her new husband and both opened postal savings accounts.
Last year Leadville, Colorado, struck a thrift note that was new in this country, so far as I know, and reference to it is particularly timely as Christmas is approaching. A mining company in that city struck the note and I hope it will be heard from one end of this country to the other. It was this: Last December an officer of the company went to the post office and opened a postal savings account for every employee—ninety in all—as a Christmas present. He placed to the credit of each 2 per cent. of what he had earned during the year. These Christmas remembrances amounted to over fifteen hundred dollars. Out of the ninety employees only five had previously opened postal savings accounts. Now, I count that substantial charity; I call that well-directed charity. We have kept track of these particular deposits and the workmen who get their start through that Christmas bounty are adding to their savings weekly by their own personal efforts. (Applause.)
Gentlemen, as a rule, we in official life swing back and forth in a measured arc, and the little one can do is so small when compared with the mass of Government activity that we feel insignificant and lost. But I feel, my friends, that in the Postal Savings System my associates and I are doing a positive good for humanity. I believe that we are making people better and happier because postal savings points the way from the sweat shop to the school—it stands for clean homes and empty alleys. Each of you is a stockholder in the Postal Savings System and its success is your success. Your dividends are in the better and happier American citizenship which it encourages and promotes. (Applause.)