The enterprise. [volume] (Wellington, Ohio) 188?-1899, 1898-02-09
POSTAL SAVINGS BANKS.

savings banks, has aroused consider
able discussion; and the persistency
with which a number of newspapers
and charitably inclined persons have
seconded the views of the Postmaster
General, has, perhaps, given the ques-
tion greater prominence than it justly
deserves, at this time. However, the
fact remains, that unless determin-
ed effort be made to expose the fallacy
of the arguments in favor of such a
system, there is considerable danger
of it's advocates adding materially to
their ranks,
1t seems to me that great many
who favor this project fail to appre-
ciate the extent to which it would in
volve the government of the United
States in a wholly untried and COM
plicated branch of banking. The most
vulnerable part of our monetary sys-
tenn, as agreed by all the leading finan-
ciers, is the quasi-banking operations
of the government, yet, despite this
fact. it is now proposed to further i'm
plicate the government in banking
operations, for the success or failure
of which we have no criterion by which
we may Judge. The success of postal
banks in England and the continental
countries is pointed out as arguing
well for their success in this coun-
try. But it must be remembered
that the conditions in those
countries are so different from the con-
ditions here, and the fundamental idea
of government so Numerically OPP
posed to our own, as to render all at
temps to predict the success of pos
tai savings bank system in this coun-
try, based upon the success of
such system abroad, absolutely
futile. We regard our government as a
means to an end, and not the end itself
and we boast of the freedom which
we enjoy in all our business relations.
In all of the countries where. the pos
tai savings banks have been establish
ed, there exists an enormous and per-
manent public debt, which makes that
of the United States seem ridiculously
small in comparison Moreover, un-
less something unforeseen happens,
the debt of this country will be eXtin-
guished in few years. But suppose
that with the Inauguration OF system
Of postal banks the depositors in the
present savings banks should be so al
lured by the golden opportunity of
withdrawing their savings from the
custody of experienced bankers, and
redepositing it with the local postmas-
ter, that the government should find
itself possessed of large amount of
deposits, how are they to be invested
so as to yield return sufficient to pay
the running expenses, give fair rate
of interest to the depostor, and create
a reserve to guard against possible
loss? The countries which have thus
far established the postal banks have
invested the deposits in their owl
bonds. During the past year 4 pei
cent bonds OF the United States, whicl
mature in 1925 sold as high as 129, ant
with the government in the market al
a purchaser, they would hardly sell fol
less than that. 1t is not long since
that a block of government 2's wa
sold in New York City at slight pre-
MUM. This would indicate q borrow
ing power on the part of the United
States of between per cent and d
per cent, and Secretary Gage conf
IDENTIFY asserts, that he can refund tn
bonds Of the United States on a 2 pc
cent basis.
With such a small income basis
after charging off the items indicates
above, the government would hardl
be warranted in paying more than Il
per cent on its deposits. Who woul
be so foolish as to withdraw his none
from banks which have proven them
selves amply secure, and place it at
much lower rate, with the govern
ment which has shown itself far fror
being an able banker-as is shown b
the two United States banks, and tn
Freedmen Savings Bank, establishe
in 1885, and whose depositors are sti
, waiting to be paid the remaining
/ per cent of their deposits. 1t is hard
probable that under these condition
the postal banks would attract ar
very large amount of deposits.
5 seems to me that the experience
Canada is in point in this connectio
The savings bank of Canada pay inte
est on deposits in much the same ma
y ner as savings banks do here
e To compete with them the Cover
4 ment established postal savings banl
: After some years of experience it h
e been proven, that the money 30 obtai
Il ed costs the state, in interest and e
n penses, more than the same amou
o borrowed on bonds would cost in int
e est. The banks pay per cent, and
5. first the Government paid the san
n When the Government reduced
). rate to 81 per cent, large amour
1. we're taken from the postal banks al
n nlacad in the regular ban