The herald., 1897-09-05
OFFICE OF THE HERALD,

September d. 1897.
The subject of government postal saw
ings banks continues to be agitated. and
the New York Financier, in its latest issue,
just to hand, has the following to say in
regard to the proposition to be embodied
in the threatened bill of Senator William
e. Mason of Illinois, which is to be intro
duced at the forthcoming session of con-
gress, providing for the establishment OF
government postal savings banks, model
ed after the systems which have proved
SO successful in Europe. The Financier
says:
If the Illinois senator can demonstrate
with any degree of accuracy how postal
savings banks may be made practicable,
he will have the unqualified support OF
large majority of both houses In putting
the law on the statute books, and bankers
throughout the country will have no hesl-
tation in endorsing his PLAN But the
trouble with postal savings banks IS that
nobody has yet been able to show that
they can be operated at profit to de-
positors, unless the laws are SO amended
as to change the whole intent and policy
of this government as enforced from the
day of Washington to the present. Pos
tai savings banks in theory are proper
and desirable. In Europe, where condi-
tions differ. they are success. In the
United States they would fail, for the
simple reason that no use could be found
for the funds, once they were left in charge
of the postoffice department. Every ad-
vocate of postal banks supports his theory
on government bond investments. That is
for ha COTS b11t a Httlp "a
Election will serve to show what narrow
basis these securities form for the up
building OF vast system embracing the
whole country.
Our entire outstanding debt is something
less than $3.50, 900 900. 1t has grown some
what during the past few years, but in
the face of what has happened in the
meantime no one can be found who will
excuse this expansion, even for savings
bank purposes. The policy and the prom
ises of all great parties since the war have
been in the direction of reducing this in
terest-bearing burden, and the day is not
far distant when the United States will be
unique among powers as possessing no
national debt With England and Ger
many, and, for that matter, France, such
saying that the national debt of Great
Britain will never be paid, which is simply
another way of expressing the idea of a
permanent liability. The latter govern
ment, especially, can invest the savings of
her people without counting on decrease
in the amount of bonds available for that
purpose, and while the returns are low. the
accumulation of an embarrassing, idle sur
plus is not to be taken into account. But
granting that the debt of the United
States is to be permanent, the supply of
bond securities is not to be measured by
the treasury totals as published from
month to month. OF the SS47 100000 or
more of interest-bearing bonds, the ma
tional banks hold something like $245, ,952, $50
to secure their circulation and United
States deposits, and on May IA last, they
held s15S5S, $50 as investments. Unless we
repeal the national banking act, this leaves
the surplus for postal savings banks at
$5S5, ,200 goo. Still, this amount is not avail
able, for the reason that savings banks or
ganized under state charters own $4,000 =
900 in the form of collateral security There
is no means of ascertaining the amount
locked up in trust funds and private boxes,
but 5000, 100000 is small proportion. This
leaves, net. about S235, 100000 in bonds
which might be termed purchasable. OF
course as the price went up in response
to a growing demand, portion of the bond
investments would come on the market,
hut as government As sold recently ON the
New York Stock exchange at 126, and still
maintain high figure, it is pretty good
evidence that the bonds are held for their
undoubted security, rather than for the
interest return they yield. A govern
ment savings bank limited to United
States bond investments could not well
pay depositors over per cent. Whether
this would be sufficient to attract depos-
itors is uncertain. If it did, the supply
would soon be exhausted and the rate of
interest would fall to nothing; it it did not,
the system would demonstrate it's useless
ness, and quickly pass out of existence.
Even were the bonds withdrawn from pri-
vate sources for public use, their gradual
retirement at maturity, and by purchase
from excess revenue, would make the sys-
tenn at the most temporary experiment