The Bemidji daily pioneer. [volume] (Bemidji, Minn.) 1904-1971, 1913-12-16
POSTAL BANK Limit
MAY BE CHANGED.
Post Office Department Believes That
By Doing Away With $500 Deposit
Limit System Can be Made to Pay
HAS NOT INJURED THE BANKS
Money Which Has Been Deposited is
Chiefly That Which Was Formerly
Hoarded-Bond not Popular

From Congressman G. H. Tavenner.
Washington, December 16.-Some
interesting facts in connection with
the operation of the posta' savings
bank were brought in recent debate
in the House over a postotfice Dill.
According to members Familiar with
the figures the actual operation OF
the system, which is now going on
three years o. age, has shoW.:.
That the postal banks n.ve not
pulled money from local banks to
any extent. .s' ~"
That the bank is chiefly used in
cities having a large percentage OF
foreign-borr population, while in
small rural scarcely any
That the money deposited in 1t Is
chiefly savings that were f':merly
boarded:
That the money deposited has not
been sent away to foreign countries
to any extent.
That the two7per-cent bonds Of
fered to postal bank depositors have
not proved to be popular invest
ment:
That, although the deposits are
steadily growing, the bank, on paper
at least, has cost $1,486,00O. Against
this the government has received in
interest from banks selected as pos
tai savings depositaries $751;, 1892. The
difference, or nearly 100000, is
net loss. SIN s
1t was explained, however, that the
figures indicating expense are large
1y bookkeeping entries, and do not
involve the actual payment of money
by the government. This is due to
the face that the postmasters of the
country in transaction business with
Washington and with patrons in con-
nection with the postal bank use a
distinctive stamp adopted by the De-
partment for this purpose. The use
of these stamps enables the postoffice
accountants to keep track of the num-
Der of letters handled in connection
with postal savings. Of course, the
use of these stamps is merely book
keeping device, since postmasters do
not have to pay for them.
The banks of the country fought
long against postal savingc. Now
they see that the system has been a
great benefit to them. 1t has brought
boarded money from hiding places
to the postoffice, which, in turn, has
deposited it with the local banks. OF
$32,5OO,OOO now on deposit with the
government, 95 per cent has been re-
deposited with local banks.
The Post Office Department is
now turning it's attention to the pro-
blem of ending the deficit in the
postal bank and making it show a
profit. This, in the light of expert
ence, it is believed can be done. In
the first place, the limit of $500
which it is permitted any individual
to deposit, is too low. The tendency
is steadily toward larger deposits by
individuals. In 1912 the average de-
post was $50; today it is $102. Ac-
counts are frequently turned away
because the law forbids the accep-
lance of more than $500 in a single
deposit. The Department is asking
that the limit be removed altogether.
The Department deposits the pos
tai savings with local banks, charg-
ing only IL per cent intereste. The
bank, in turn, loans the money at in
terest rates at from six to eight per
cent Banks pay three and four per
cent interest on savings deposits, and
could we'll afford to pay three per
cent on deposits as permanent as
those of the post office. The Depart
ment is considering raising the rate
to be paid by banks to three per cent.
BY removing the limit of deposits
a double quantity of deposits can be
handled by the present post office
force. it is hoped to make the bank
return a profit.