New Mexico state record. (Santa Fe, N.M.) 1914-19??, 1920-11-26
works WELL BUT
NEEDS CHANGES
POSTAL SAVINGS SYSTEM FRoe-
ABLY WILL BE REoRGANlzED
BY CONGRESS SOON.
INTEREST PAID TOO SMALL
Government Is Criticized for "Prof-
iteerins" by R~edepositing the Money
Herbert Hoover Suggests Some
Amendments Deem Advisable.
BY M p.

Washington.-A reorganization OF
the governments postal savings sys-
TEN will in all probability be made by
congress at the neXt session. Recent
ly the system has received a good deal
of attention from Investigators, official
and unofficial, who agree IN saying
that 1t has been remarkably success
full under the limitations of existing
law, but who strongly advocate many
changes. The Post Office department
has repeatedly said that the system
has outgrown the legislation under
which it was established. So with
both the department and congress CON
vlnced that new legislation is needed,
1t seems reasonable to expect that
something will he done ut the ap-
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 redepositlng the money
is prOfteerlng. The postal savings
banks were established, It is pointed
out, for the purpose OF enlarglng the
area of national savings. 1t was con
sidered that postal savings would sup
plement the mutual and other savings
Institutions by offering unquestlOned
security to the more timorous Of the
country's population, especially the
fpraInn horn, af SOM ntf.naIitfn and
that it would furnish savings bank
facilities to areas not covered by the
private and mutual institutions.
Herbert Hoover's Opinion.
When the system was established II
was proposed to avoid competition
with the banking system generally by
paying a fixed rate of . per cent, this
being about one-half the rate Of mu-
tuai savings institutions, and to Sc
cure the redistribution of such depos-
Its In the areas from which they orig
mated by r~edepositing in the banks
ut pa per cent interest. 1t was not
the thought of the trainers of the sys-
TEN that 1t should draw deposltors
through the rate of interest paid, but
that the inducement of safety should
be the chief motive for %deposltlng
money In these banks.
Herbert q. Hoover, former federal
food administrator, who IL among the
unofficial Investigators of the existing
system, says that In any event the
method of payment of interest should
be recognized in such a manner as
approximately to distribute the prof
its back to the depositors. In other
words, If interest were payable at 2
per cent compound Interest on quar-
terly balances 1t would, In view Of the
considerable deposits that remain fol
less than a quarter, absorb about the
per cent of profits made by the gov
eminent. Mr.. Hoover thinks tina
when congress gets into the question
II will find that the real issue will be
not only justice to depositors, but also
whether the aggregate of national
savings can be Increased by offering
q larger return on postal savings de
posits-whether more savings can b.
pulled out Of the stockings, waste and
luxuries and "wildcats." The former
food administrator says that every
dollar so saved is n contribution t.
national welfare; and he says he la:
no doubt Of the validity OF the prln
| ciple that the government, through
postal savings banks, should not com
pete with mutual and other saving,
banks; but he does believe the aggre
gate of national savings would b,
stimulated II the government stopped
%profiteering and If II paid somethln.
like an adequate rate of interest.
II appeal to the Investigators tina
the first thing to do Is TO pay interes'
at the rate of one-half Of ] per cen
quarterly on average deposits. Thu
second step they would like TO sex
taken Is a declaration yearly In ad
vance OF an additional rate that vii
be paid upon deposits Of IL months
duration.
Nations Won't Disarm Yet.
The United States knows on
cially that when the assembly O
the League of Nations meets II
Geneva this month, japan will mott
~ the assembly that she will not agre,
TO any curtailment of armament s,
long rs the Unfted States remains on
OF the league. Some weeks ago tn
| United States made informal inquire
of the larger nations OF the League
as to what they had In mind with n
spect to a reduction Of ornaments
These inquiries brought out the infor
nation as to the policy which Japai
will pursue so long as the Unitet
| States insists on going 1t alone, an,
also revealed the intention Of the Eu
ropean nations not to press the cues
t,on of armament curtailment at thii
fine. so the whole subject Of reduc
ing appropriations for preparations TO
possible war will be held In abeyanc'
by the world.
II Is obvious, % persons qualified q
sneak with authority say, that tn
longer this matter is allowed TO res
the more difficult 1t viii be to persuad'