The herald., 1897-10-12
OFFICE OF THE HERALD,

LOS ANGELES, Oct. 18th.
The movement favoring the adoption Of
the Postal Savings bank system in this
country is exciting q considerable amount
of controversy in the press. and the views
OF the opposing parties are set forth pro
and con with unusual vigor and often with
out SUFFICIENT information, as is often the
case in disputations upon financial SUBJ
jects of national interest. Space has been
given in this journal for much that has
been argued in favor of the establishment
of this system Of banking and on the
principle of presenting both sides of
question, we now quote from American In
vestments, leading financial journal pub
lshed in Buffalo, the following remarks.
The journal says:
There appears to be determination to
keep up the agitation of this subject in
spite Of the unanswerable arguments that
have been brought forward against the
wisdom Of their adoption. A Chicago Jour-
nal, more enterprising than wise and more
desirous Of advertising itself than doing
the banking interests Of our country
real service, has been persistent in its
efforts in keeping the question before the
people. The enthusiasts do not come from
states like New York, where there is al
ready in existence superior order Of saw
ings banks, and if these earnest advocates
of the postal variety will take the pains
to conduct little side investigation Into
the history of the establishment, manage
ment and record of our banks. and the
fact that they can be duplicated elsewhere
If the people and lawmakers are so dis
hat nd mill ho fIar hi
cooled. Objections to postal savings banks
are more than two in number. The first
general statement that occurs to the read
er with great force is, that what is possi-
BILE in this direction in foreign countries
is not always appropriate or possible here.
We are a newer people, having different
ideas of growth and the returns that come
from invested funds. With us the smaller
the fortune the greater Is the desire for
higher interest rates. Our tastes and ideas
of living are more expensive. SO that it is
a very serious question whether the small
savers of money are now prepared to ac-
cept two per cent rate, even If it Is sup
ported by governmental security and in
dorsement. Rather than consent to the
acceptance of SO low rate, these people
will, to very large extent, indulge in a
little risk or speculation that promises
better return.
From the standpoint of the government
there is little or nothing of an encouraging
nature to be found. England has found 1t
an expensive luxury and is annually pay
ing out large sum to meet deficiencies.
Our country is not at present prepared to
expend any considerable sum for the edu-
cation of the people in the idea of thrift
and economy-at least not through the
medium Of these banks. The addition to
our postoff1ces of another department car
ries with 1t an increased force of inspect
ors to guard against defalcations and irreg-
ularities, and the postoffice department is
already too heavily burdened to take on
additional expenses The bill that has
been prepared for presentation to the next
session of congress is said to have been
compiled under experienced advisors both
of our own and other countries. We APP
pend the most important feature which re-
lates to the investment of deposits:
Sec. g. That it shall be the duty of the
secretary of the treasury to invest in in
terest-bearing bonds of the United States,
or in bonds the principal and interest OF
which is guaranteed by the United States,
funds arising from the operation of this
act in excess of what shall be deemed by
the postmaster general necessary to keep
on hand as a reserve for redemption pur-
poses and FOR expenses of administering this
act. Whenever 1t may be found impracti-
cable to secure United States bonds the
secretary OF the treasury may, in his dis
cretion, invest such funds in state bonds
and in the bonds of municipalities and
counties of the United States, subject to
the restrictions hereinafter provided:
First The secretary of the treas
ury may invest such funds in state
bonds and in the bonds of munich
palities and counties guaranteed by the
state in which such municipalities and
counties are located : If for any reason any
state shall fail to make payment Of prin-
cipal or interest on bonds in which postal
savings bank funds are invested. or shall
fail to make good its guaranty of munich
pal or county bonds. the postmaster gen.
eral shall refuse to receive deposits at
branch postal savings banks within that
state, and shall also refuse to pay interest
on deposits standing to the credit of de-
positors at savings bank offices within that
state, accruing from and after the date
he shall set for refusal to accept any fur
ther deposits at branch postal savings
banks in said state.
Second-Without such state guaranty,
the secretary of the treasury may, in his
discretion, invest said funds in the bonds
of municipalities having not less than
twenty thousand inhabitants, according
to the last preceding decennial census of
the United States, or in the bonds of coun-
ties having not less than forty thousand
Inhabitants according to the last preceding
decennial census, provided that the total
bonded Indebtedness of such municipali-
ties or counties in whose bonds investment
is made Is not in excess of per cent of the
taxable valuation in such municipalities
or counties. Provided, further, that in all
cases of investment in municipal or county
bonds without state guaranty, the bonds
in which investment Is made shall be ap-
proved by a commission composed of the
secretary of the treasury, the postmaster
general and the attorney general, as safe
and secure investments.
Third-Provided. further. that in no case
shall the amount invested in state bonds
and the bonds Of municipalities and coun-
ties of any state exceed twice the amount
of deposits standing to the credit of depos-
itors in that state.
Some things connected with our govern
ment bonds require pointing out. 1t is
quite certain that no new issues will be
made, but that the interest-bearing debt
will gradually decrease. so that as the
banks grow more in number the opportu-
mites for investing in these securities will
decrease. Some portion Of the $559, 900, 900
maturing in 1907 will be refunded, but
large corporations will be so strong a COM
petitor against the banks for the possess
sion of them, that they will win. The banks