The citizen. [volume] (Berea, Ky.) 1899-1958, 1920-11-18
works WELL BUT
NEEDS CHANGES
POSTAL SAVINGS SYSTEM PROB
ABLY WILL BE REoRoANIzED
BY CONGRESS SOON.
INTEREST PAID TOO SMALL
Government lie Criticized for "Prof.
iteering" by Redepositing the Money
Herbert Hoover Suggests Some
Amendments Deem Advisable.


Herbert Hoover Suggests Some
Amendments Deem Advisable.
BY JAMES p. HORNADAY.
Washington.-A reorganization of
the governments postal savings sys-
TEN will In all probability be made 10y
congress at the next session Recent
~ the system has received a good deal
of attention from investigators, official
ana unofficial, who agree IA saying
That II has been remarkably success
ful under the limitations of existing
Jaw, but who strongly advocate many
changes. The Post Office department
mas repeatedly said that the system
has outgrOwn the legislation under
which II was established. So with
both the department and congress con
WINGED that new legislation is needed,
II seems reasonable to expect that
something will he done at the APP
preaching session.
The chief criticism against the sys-
ten as 1t is now conducted is that the
depositors are not paid a sufficient in
terest on their deposits, and that the
government by redepositnc the money
Is profiteering. The postal savings
banks were established. II is pointed
out, for the purpose of charging the
area of national savings. Ii was con-
sidered that postal savings would sup
plement the mutual and other savings
institutions by Offering unquestioned
security 10 the more timorous of the
country's population, especially the
Foreign born of some natiOnalities and
that II would furnish savings bank
facilities to areas not covered by the
private and mutual institutions.
Herbert Hoover's Opinion.
When the system was established 1t
was proposed To avoid competition
with the banking system generally by
paying fixed rate of . per cent, this
being about one-half the rate of mu-
tual savings Institutions, and to Sc
cure the redistribution of such depos-
its In the areas from which they orig
mated by redepositing in the banks
at pa per cent interest. 1t was not
the thought of the trainers of the sys-
TEN that II should draw depositors
through the rate of interest paid, but
that the inducement of safety should
be- the chief motive for depositing
money In these banks.
Herbert q. Ilou"er. former federal
food administrator. who f. among the
unofficial Investigators of the existing
system. says that in any event the
method of payment of interest should
approximately TO distribute the prof
Its back TO the depositors In other
words, If interest were payable at
per cent compound interest on quar-
terly balances IL would, in view of the
considerable deposits that remain for
less than a quarter, absorb about the
per cent Of profits made by the gov
eminent. Mr.. Hoover thinks that
when congress gets into the question
II will find that the real issue will be
whether the aggregate of national
savings can be increased by Offering
a larger return on postal savings de-
pOsits-whether more savings can he
pulled out of the stockings, waste and
Injuries and wildcats" The former
food administrator says that every
dollar so saved is contribution 10
national welfare; and he says he has
no doubt of the validity of the prln-
ciple that the government, through
postal savings banks, should not com.
pete with mutual and other savings
banks; but he does believe the aggre-
gate of national savings would be
stimulated II the government stopped
profiteering and II 1t paid something
like an adequate rate of interest.
II appears TO the Investigators that
the first thing TO do is TO pay interest
at the rate of one-half Of l per cent
quarterly on average deposits. The
second step they would like TO see
taken is declaration yearly In ad-
vance OF an additional rate that will
be paid upon deposits of II months
duration.
Nations Won't Disarm Yet.
The United States knows Off.
cialiy that when the assembly of
the League of Nations meets In
Geneva this month. Japan will noti-
fy the assembly that she Will not agree
to any curtailment OF armament so
long as the United States remains out
OF the league. Some weeks ago the
United States made informal inquiries
Of the larger nations of the league
as to what they had In mind with re-
spect 10 a reduction Of ornaments.
These inquiries brought out the infor-
nation as to the policy which japan
will pursue 80 long as the United
States insists on going II alone. and
also revealed the intention Of the Eu-
ropean nations not 10 press the ques-
fion OF armament curtailment nj this