Los Angeles herald., 1910-06-24
THE POSTAL SAVINGS
BANK

WE feel disposed to congratulate
w President Taft upon his success
in securing the passage of the
Postal Savings bank bill. While the
bill as passed may not provide an en-
tirely satisfactory law it will in the
future be found very much easier to
correct any Objectionable features of
the existing law than 1t was to secure
the enactment of the law originally.
We know that some of the banking
fraternity have seriously objected to
the passage of this law upon the theory
that it would take from the banks some
of the money now on deposit in them.
This we believe to be an entirely mis-
taken idea of the effect of the law. In
the first place the law is so guarded
and limited by the provisions that no
person can deposit more than $1OO in
any one month, nor have on deposit a
total of more than $500 at any one time,
as to make it impossible for individuals
to accumulate important sums in gov
ernment savings banks. In the second
place, no person who has become used
the country and receiving interest at
the rate of from to 4 per cent per
annum paid by those institutions upon
his deposits will be likely to prefer the
postal savings bank with its interest of
per cent per annum. But we believe
a very excellent effect of the law will
be to put in circulation many small
sums aggregating millions of dollars,
now boarded by people whose ignor-
ance of business methods makes them
suspicious of all banks, but who would
not hesitate to trust the government
with their savings. This applies par
ticularly to the more ignorant of the
large foreign population of the United
States-people who in their own coun-
tries have never had savings sufficient
to make it possible for them to pat
ronize banking institutions, who are
naturally suspicious of all banks and
who for that reason hoard their savings
in their possession thus keeping the
money out of circulation. The effect
of the postal savings bank should be to
call forth these hoardings, to the ex-
tent Of many millions of dollars, and
put them in circulation.
Furthermore, the individual who be-
gins by making deposits in the postal
savings bank and receiving per cent
per annum, thereby being taught the
possibility of his money earning a re-
turn in the form of interest, will, when
his deposits in the postal savings
bank amount to what is to him con-
siderable sum- and he has become
trained in the idea of receiving interest
thereon, be more likely to finally trans
fer his deposit to the regular savings
banks for the purpose of receiving the
increased interest on it, In other words,
we believe that the savings banks in
place of finding in the postal savings
bank a rival, will find it most useful
school for teaching a certain class of
our citizens the advantage of deposit
ing their savings in banks and receiv-
ing an income from them, and that the
lesson so learned will finally lead to
their becoming depositors in the regu-
lar savings banks of the country.
Certainly the government savings
bank will draw from their hiding places
and put in circulation quantities of in
dividual hoardings, amounting in the
aggregate to a large sum of money,
which at the present time is not in cir
culation, and does neither it's owners
nor the public any good.