The Oskaloosa herald., 1901-08-08
POSTAL SAYINGS BANKS.

The demand for postal savings
banks is popular one, but the OBJ
stacles encountered in the effort to
put the theory into effect are apt to
keep the object in the talking stage
for long time to come. Henry A.
Castle, auditor of the postofice de-
partment, in an article in the North
American Review directs attention
to some reasons why the department
is not enthusiastic in it's efforts to put
the postal savings system into effect
in this country. His chief argument
is that the system would prove
enormously expensive.
The lowest rate of interest suggest
ed, at which the postal banks could
secure deposits, is per cent. While
depositors can get 3 or 4 per cent,
interest from private savings banks
it is unlikely that they would patro-
nize the government banks at less
than 3 per cent. return on their de-
posits. Suppose the government
should offer 3 per cent. interest, and
within short time. as Mr.. Castle
believes would be the result, should
find itself in the possession ofS1 ,000,-
900, ZOO in small deposits. How
would the money be invested to make
the enterprise profitable or at least
self supporting? The governments
per cent, bonds are now selling at
1867. An investment in government
bonds would accordingly bring less
than per cent, while depositors
would have to be paid 3 per cent.
Tie government would lose not only
the difference in interest, but it would
be out of pocket the enormous
amount necessary to pay employees
for handling the funds and keeping
the books. In his own Office Mr..
Castle estimates that 1000 extra
clerks would be necessary to handle
the new business of the department.
1t is his opinion that none of the
postal savings bank bills hitherto
brought to the attention of congress
has dealt with the subject as a busi-
ness proposition.
The example of England has often
been pointed out as furnishing proof
of the practicablity of the postal
savings system. Experience has
proved that the English postal savings
bank is an expensive adjunct of the
government. The British postal
bank pays depositors 224 per cent.
interest. The money is invested in
consuls drawing 24 per cent. interest.
These consuls have been selling at
110 to ia, The government is out
the amount of the premium as we'll
as the entire cost of maintaining the
postal savings department. The pro-
iect of reducing the rate of interest
to make the institutions self support
ing has often been discussed, but no
statesmen have been found willing
to father such an unpopular pro-
position. Safe investments for small
sums of money at the rate of interest
named are not easy to find in Eng
land, and the wrath of several million
depositors would be invoked by the
proposal. So the system is continued
as a drag upon the postal department
and an imposition upon many tax
payers for the benefit of the COM
paratively few postal bank depositors.
The vastly greater area which
would have to be covered in this
country, together with the higher
salaries which employees would de-
mand, would be likely to make the
system much more expensive in this
country than in England. 1t is not
surprising that our national legis-
lators hesitate to try an experiment
which promises so little of satisfac-
tory result as business proposition.
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