United States Postal Savings System
The United States Postal Savings System was a postal savings system signed into law by President William Howard Taft and operated by the United States Post Office Department, predecessor of the United States Postal Service, from January 1, 1911, until July 1, 1967.[1][2]
Operations
The Postal Savings System was established as a result of lobbying by farmers and workers with grievances against the private banking system due to numerous bank closures and inadequate credit opportunities.
The system accepted deposits from the general public, but did not offer full
Most other postal savings systems invested deposits in
Total assets in the postal system remained at about $200 million until the Great Depression, when many savings and loan associations (S&Ls) failed. Customers seeking the postal savings system's security—and the 2% interest rate, which was now comparable to what banks and S&Ls offered—greatly increased postal savings deposits to about $1.2 billion. Because the system could not redeposit funds in S&Ls, which made most mortgage loans, the housing market weakened. As more banks refused postal deposits because of the 2.25% (raised to 2.5% in 1934) interest requirement, the system increasingly invested in the only legal alternative, public debt, further constricting the money supply. O'Hara and David Easley wrote that the inflexibility of the postal system inadvertently worsened the economy during the Depression, instead of stabilizing it as intended.[4]
At its peak in 1947, the system held almost $3.4 billion in deposits. In addition to holding cash deposits, the system also sold fixed-term bonds and operated a Savings Card program. These cards provided spaces for a fixed number of postage stamps, each purchased for a few cents. Once filled, the cards could be presented for credit to a savings account in the system.
From 1921, depositors were fingerprinted.[7] Although this practice was initially 'not to be associated with criminology', the early 1950s Yours Truly, Johnny Dollar radio show suggested that in some instances, Postal Savings account fingerprints were used for positive identification in criminal cases.
According to a 2019 analysis, "the program was initially used by non-farming immigrant populations for short-term saving, then as a safe haven during the Great Depression, and finally as long-term investment for the wealthy during the 1940s... Postal Savings was only a partial substitute for traditional banks, as locations with banks often still heavily used postal savings."[8]
Decline
The system originally had a natural advantage over deposit-taking private banks because the deposits were always backed by "the full faith and credit of the United States Government." However, because the establishment of the
Locations
On March 26, 1911, the locations of the central depositories for the first 19 states were established, followed the next day by 25 others. The post offices were selected by merit rather than by geography, based on those with the best efficiency record in the state.[10]
- Bessemer, Alabama
- Globe, Arizona
- Stuttgart, Arkansas
- Oroville, California
- Leadville, Colorado
- Ansonia, Connecticut
- Dover, Delaware
- Brunswick, Georgia
- Coeur d'Alene, Idaho
- Pekin, Illinois
- Princeton, Indiana
- Decorah, Iowa
- Pittsburg, Kansas
- Middlesboro, Kentucky
- New Iberia, Louisiana
- Rumford, Maine
- Frostburg, Maryland
- Norwood, Massachusetts
- Houghton, Michigan
- Anaconda, Montana
- Nebraska City, Nebraska
- Carson City, Nevada
- Berlin, New Hampshire
- Rutherford, New Jersey
- Raton, New Mexico
- Cohoes, New York
- Salisbury, North Carolina
- Wahpeton, North Dakota
- Ashtabula, Ohio
- Guymon, Oklahoma
- Klamath Falls, Oregon
- Dubois, Pennsylvania
- Bristol, Rhode Island
- Newberry, South Carolina
- Deadwood, South Dakota
- Johnson City, Tennessee
- Port Arthur, Texas
- Provo, Utah
- Montpelier, Vermont
- Clifton Forge, Virginia
- Olympia, Washington
- Grafton, West Virginia
- Manitowoc, Wisconsin
- Laramie, Wyoming
References
- ^ "Postal Savings System" by United States Postal Service, July 2008
- ^ Postal Savings System Act of June 25, 1910, P.L. 61-268; 36 Stat. 814
- .
- ^ S2CID 154632921.
- ^ Shaw 2018.
- ^ O'Hara, Maureen (March 23, 2023). "'Gerbil banking' preceded the Great Depression. We're seeing it again today". Fortune. Retrieved March 24, 2023.
- ^ "Postal Savings Depositors All to Be 'Fingerprinted'", "The New York Times", December 10, 1921
- )
- ISBN 978-0-226-63633-7.
- ^ "Postal Savings Stamps of U.S.", by H.L. Wiley, "Mekeel's Weekly Stamp News", May 2, 1914, p1