By 1915, immigrants owned more than 70 percent of the postal bank’s deposits even though they were less than 15 percent of the population. Consequently, the busiest postal banks were those right near the ports. They have absolute confidence in the Government and know what postal savings banks are.” The post office offered information to customers in 24 languages and would pass out leaflets right outside the ports of entry into the U.S. The reason (from congressional testimony in 1913): “Hundreds of thousands of our newly made citizens distrust banks and will not patronize them. It was the raft of recent immigrants in urban areas who immediately took to these banks. And ultimately, it was not southerners and westerners that most needed the banks as had been expected (although they eventually came around). Princeton University historian Sheldon Garon claims that it was these caps and concessions that ultimately doomed the postal banking system in the United States. The Times reported with frustration that many larger deposits were turned away and that the current deposits likely represented a fraction of those available. Accounts were capped at $100 deposits allowed per month and a total savings cap of $500-the limit was raised to $2,500 dollars in 1918.īy 1913 (just two years later) the banks had received $32 million-most of which came from “stocking banks,” as reported by the New York Times in 1913. The postmasters and supporting congressmen also called the postal banks “the poor man’s banks” to set bankers at ease. * The interest on accounts was set by statute to a low 2.5 percent to avoid luring customers away from banks. The bill eventually passed in 1910 and created what was called the United States Postal Savings System. The truth is that they are plenty literate, but they either don’t trust banks or the banks left their neighborhood years ago, leaving only payday lenders. Today we hear similar claims that the problem with the poor and unbanked is that they “lack financial literacy” or that they just don’t have enough money to open a bank account. The Boston Globe opined, “It is easy enough for anybody to find a savings bank the trouble is to find the savings to put in it.” Others urged that the reason rural dwellers were not saving in banks was because of the “ignorance of the common people,” or because “the inhabitants of remote rural districts are not so well posted in the world’s wicked ways as those who have the opportunity of perusing the daily papers.” In other words, some people are just too dumb and too poor to bank. Opponents claimed that anyone with money to save was already saving it. The debate at the time over whether postal banks were needed is illuminating today. The Postal Savings Bank Bill, as passed, finally acquiesced to both localism and private bankers by mandating that almost all of the postal deposits stay in the community of origin. Taft’s clear support of postal banking and his electoral mandate still weren’t enough to overcome bank and Democratic opposition. While they claimed that the private markets and savings banks were sufficient, in fact 98 percent of all savings banks were in the five northeastern states, leaving the South and the West virtually unbanked. Ideological opponents called it communist, socialist, and paternalistic. The American Bankers Association objected to the competition with the federal government. Everyone feared centralized bank power, and localism in banking was as sacred as the Constitution at the time. They objected to the notion that all the deposits would go directly to the Treasury. President Grant himself endorsed the postal banks as a way to free up hoarded money in far-flung regions of the country. Grant’s postmaster general, John Creswell, proposed post office savings banks to pay for a new telegraph system. But in the U.S., postal banking had other uses as well: In 1871, President Ulysses S. Postal banks started in Great Britain in 1861 and, from the outset, the primary goal was financial inclusion.
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