The New York herald. [volume] (New York, N.Y.) 1920-1924, 1920-10-04
FROM HERBERT HOOVER.
A Reply to Mr.. Burleson in Regard to
Postal Savings Banks.

Postal Savings Banks.
To THE NEW York HERALD: I regret
that Postmaster General Burleson In his
communication in your columns Of Sep
TENDER 20 had apparently not seen the
full statement in connection with the
Postal Savings Bank made by myself
when called before Senator Calder's
Committee on Reconstruction Matters.
Otherwise he would perhaps have d.
rected his discussion to the main issues
raised there.
The discussion hinged upon the neces-
sity of change in regulations and law to
enable payment OF increased interest on
deposits, first in order to do justice to
the depositors and second as a stimuli
liant to national thrift. No reference
was made to the Postmaster-General so
far as / am aware. The whole ques-
ton was raised by Mr.. Eugene Meyer
and his friends in an endeavor to secure
that the Postal Savings BANK should be
put on basis to further encourage
thrift, and. as far as am aware. there
has been no suggestion OF craftsmanship
in the matter. / am unable to agree
with the Postmaster-Genera that harm
can be done to the depositors in the
Postal Savings service through ''crea-
ton of suspicion or unrest amongst
them by calling attention to the glar-
irg public injustice on their behalf.
Our contentious were (a) that the
service was never intended for profit
Cor revenue): (b) that the Government
should pay its profits out in interest, In
an endeavor to give full per cent in
the spirit of the law; (c) that the regu-
lations are unjust to the depositors and
discourage thrift (d) that the law
should be amended in order that major
investment should be in Government Sc
curities (e) that the rate should thus
be increased above 2 per cent. as fur
Their stimulant to savings. None of these
matters were touched upon by the POST
master-Generals letter to you.
The Postmaster-General apparently
does not consider that the Government
is profiteering by earning large profits
from the poorest section of the commu-
nifty. Although the earlier postal saw
ings statements are by no means clear.
1t is evident enough that during the ifs
cal year of 1918 the deposits rose from
s131. $4,000 to s14s,471.00 that the
total amount of interest paid to deposit
tors was S1.259.O00. or somewhere about
/ per cent. on average OF the deposits,
and that the report points with pride to
net profit made by The Post Office OF
s1,125, 1851. The statement for the
year 1919 shows deposits rose from
s14S,000, 900 to s167,00O,O00 and shows
interest paid amounted to Sy.296,3S2, and
that the profit made by the Post Office
after expenses and interest paid deposit
tors was s1.616,0S7.15. In both cases 1t
| would appear to have been able to pay
interest upon deposits remaining a full
quarter instead of limiting it to de-
posits remaining a full year and thus
have distributed the Governments prof
its to the depositors.
Although, as said, the early reports
are not very full, they do indicate that
the loss on conduct of the service dur
ing its early years could not have ag-
gregated much more than s1,000,000
This. in my mind, as equipment has been
currently charged off, would represent
the capital invested In the bank l
should think the ratio of earnings indi-
Gated above might properly be labelled
profiteering IL 1t were done by private
bank.
agree with Postmaster-General
Burleson that Republican Adrninistra-
ton is responsible for the original regu-
lations limiting interest to full years de-
posts. think they have been proved
wrong, but i might add also that the
present Administration has continued
these regulations after the time when the
bank grew in deposits to an extent that
turned it's business from annual loss to
great profits. AS indicating lack OF
partisanship in the matter, I might re-
peat that / commended the present Ad-
ministration for the constructive legis-
lation In extension of the deposit maxi
NUNS and other improvements in the
law covering the Postal Savings service.
If wanted to be partisan I should men,
ton that the number OF depository post
offices has been reduced from 1888 in
1912 to 6.439 in 1e19-and, again to be
non-partisan, I may add that mucn OF
this reduction may have been justified.
HERBERT HOOVER.
NEW York, October 2.