The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1897-11-26
POSTAL SAVINGS BANKS.
Objections to Postmaster General
Gary's Plan.
New York Financier.


New York Financier.
We cannot see that Postmaster General
Gary in his plea for the establishment OF
postal savings banks has contributed any
thing of value to the arguments which pass
current among the advocates of these IN
StitutionS The facts of the matter are
that postal savings banks are impracucaple
under present conditions. AS we nave
pointed out time after time only small
proportion of the United States bonded m
debtedness can be made ayaliaple. t tOa
people will tolerate indiscriminate invest
ments in State or municipal bonds as IN
tereSt-bearing security for deposits IS not
to be entertained for moment. It should
not be forgotten that existing facilities for
investing savings have already been per-
fected to a high degree. There are IN Inc
seven States of Maine New Hampshire,
Vermont Massachusetts, Rhode Island,
Connecticut and New York no less than
,691 depostors in savings banks. The
controller of the currency, in his 1895 re-
port stated that the aggregate resources
of the 9SS stock and mutual savings banks
reporting were over two thousand million
dollars. Over one-half of this amount had
been applied to loans, Sac, $3.50 had peen
invested in United States bonds and $156,-
676312 in other stocks and bonds. About
$175, 900 600 stood in the form of surplus and
profits. The fact should not be overlooked
that the returns were not complete, and
that probably an addition of 20 per cent.
might be added to the totals to obtain
conclusions. the controller says, 1T is noted
from the returns that it is exceedingly diff
ncult to MAINTAIN the rate or interest winch
has been paid the past few years, and in
dications are that a reduction in the rate
is inevitable in the near future" This
conclusion was eminently correct, and re-
auctions have been the rule for year past.
The great insurance companies, with de-
positors (for that is what policy holders
arel outnumbering Savings-bank patrons
have felt the force of this cheapening of
money, and according to a circular recently
serves on a S5s instead of a per cent rate
The funding of railroad bonds at lower
rates of interest the sales of municipal
bonds on a per cent basis and the num-
berless indication of a supply of idle cap
ital far in excess of demand, prove that
postal savings banks would occupy diff
cult position with respect to. high-claSS in
vestments. If they were successful-that
is. if they received heavy deposits-the sit
uation would become even more complicat-
ed. Ideal government presupposes that its
actions bring the greatest good to the
greatest number" Would it be an act of
ideal government to seriously disturb the
savings of millions of its citizens, to the
benefit of comparatively few of it's num-
Der?
premises. He extols the system of public
savings banks on the ground that they
would "inculcate thrift" and in the next
sentence admits that many millions of idle
capital are boarded" Is this not admis-
sion that thrift has already been pretty
well cultivated? If not what is to be said
of the five or six millions of depositorS in
private banks?
The proposition to invest the proceeds of
Of which an interest fund would be forth
coming, is not worthy of serious considera-
ton. The governments experience with
public buildings, under federal manage
ment, has not been of character to war
rant needless expansion. and the fastening
of new horde of office holders on the
treasury is one of the last things in the
world to be encouraged.
These are a few Of the objections that
seem at first glance worthy of considera-
ton. We have not touched on the CEN
tralization Of capital drawn from local
sources and generally needed for local
uses that would follow, nor of the doubtful
constitutionality of the whole proposition.
The Constitution speaks of the establish
ment of "postoffices and post roads, but
says nothing that assumes the privilege of
establishing postal banks.
We believe that the banking interests of
the United States are not averse to the
tablishment of these banks from a personal
rather, of the best fnanciers recognizes
the ultimate failure of the plan, and is
against it for that reason. In conclusion
we have only one suggestion to make. II
the people want postal savings banks they
will have them whether or no. Why not
fund the greenbacks into 2A per cent. bonds
and make them the basis of investment.
overcoming the contraction in the currency
by more elastic issue of national bank
notes?