It was argued that postal savings banks would have an undue advantage over private institutions because of the great confidence in the Government entertained by working people; and it was asserted that funds would be withdrawn from existing banks and deposited in the postal savings banks.... In reply, the advocates of postal savings banks claimed that existing banks had nothing to fear from governmental competition; that they had the advantages of an established clientele, higher interest rates, higher limits, if any, in the amounts that could be kept on deposit, and of the close personal and advisory relation which so often exists between a bank and its customers. They further argued that postal savings banks would be a help rather than a hindrance to other banks. They would educate the people to habits of thrift and would draw money out of hoards; and the deposits which they received would for the most part be transferred to other banks as soon as the limit fixed for postal savings banks deposits should be reached, or even before, as the depositor began to appreciate the safety of other banks and the advantage of their higher rate of interest....
The immediate occasion of the last active movement for a postal savings bank system in the United States was ... the losses and inconveniences arising from bank failures and from the suspension of cash payments in the panic of 1907. Naturally, therefore, the demand for great safety of savings deposits played an important part in the discussion.
The advocates of postal savings banks cited figures showing the number of national bank failures and the losses involved, and similar figures for savings bank failures in certain states. They made much of the large amounts involved and of the hardships in individual cases. On the other hand, the opponents of the postal savings bank scheme quite generally dealt with percentage figures rather than with absolute amounts and showed that for recent years the average losses, in terms of percentage of the amounts on deposit, were almost infinitesimal.
The figures cited for bank failures, so far as they relate to savings deposits, are so incomplete as to be of doubtful value in measuring the extent of the losses....
After all, such figures give us no adequate measure for losses of this kind. "Among the experiences of working people none is more demoralizing and few are more cruel than loss of savings through failure of banks or absconding of individuals intrusted with funds." To such people there is cold comfort in the assurance that the average loss of savings bank depositors over a long period of years is but a fraction of a mill on a dollar. The loss is theirs: it is not distributed among all depositors.
In urging that a postal savings bank would draw money from hoards into circulation, the advocates of the scheme claimed also that such a bank would keep in the United States money that would otherwise be sent abroad by foreigners.... Much was made of the fact that every year many millions of dollars in money orders payable to self are bought for savings purposes.... In such cases the purchaser not only failed to receive any interest on his savings but was required to pay the money order fee. Many immigrants, moreover, distrust American banks, and, being familiar with postal savings banks in their home countries and having great confidence in government institutions, remit their savings to these home banks. How extensively this is done we have no figures to show....
THE MAIN FEATURES OF THE SYSTEM
[95]The Postal Savings Bank System of the United States, which began operations January 3, 1911, by the opening of a postal savings bank in each state, is under the control of a board of trustees, consisting of the Postmaster-General, the Secretary of the Treasury, and the Attorney-General.
Depositories for the receipt of such moneys are designated by the Board. An initial appropriation of $100,000 was made to cover the cost of putting the law in operation, which was supplemented by another appropriation of $500,000 in the session of 1911.
Any person over ten years of age may deposit, but no person shall have more than one postal savings bank account in his or her own right. Upon making the first deposit, a certificate of deposit is issued, which is to be surrendered when paid, and cancelled; or in the event of making a subsequent deposit is to be surrendered for one calling for a higher amount. The lowest deposit permitted is one dollar, the limit being $100 in a calendar month; but to provide for small deposits, a postal savings card is issued for ten cents, to which may be attached postal savings stamps, which when filled will be accepted in lieu of one dollar.