These banks were established under an act that went into effect June
25, 1910. Under this law, as amended May 18, 1916, persons over ten
years of age may deposit any amount, providing the balance to the
credit of one depositor does not exceed $1,000. Two per cent interest
is paid on deposits, and there is provision for exchange of deposits
for United States bonds of small denominations.
The facilities thus provided were immediately taken advantage of by
the foreign-born groups, and the postal savings banks became almost
banks for the foreign born. That is, in September, 1916, 375,000, or
80 per cent, of the total number of depositors were persons of foreign
birth, and they owned 75 per cent of the deposits. In proportion to
population the deposits were in 1916 about eleven times as great as
those of the native born (due allowance being made for the age of the
two population groups). The Greeks, Italians, Russians, and
Hungarians, all coming from countries in which there are postal
savings arrangements, found it especially easy to make use of them.
The department felt, however, that the facilities could be greatly
extended, even among the foreign born. Therefore, circulars describing
the organization, methods, and advantages were distributed. They were
written in the following languages: English, Bohemian, Bulgarian,
Chinese, Croatian, Danish, Finnish, French, German, Greek, Hungarian,
Italian, Japanese, Lithuanian, Norwegian, Polish, Portuguese, Russian,
Ruthenian, Serbian, Slovak, Slovenian, Spanish, Swedish, and Yiddish.
In spite of the fact that this system is characterized not only by
security, but also by certain democratic and convenient features
especially serviceable to many foreign born, there are certain
limitations to which Professor Kemmerer has called attention in the
following statement:
As a matter of fact, the interest rate paid is so low that it
makes a very weak appeal to the class of people who deposit
in the postal savings banks. Their motive is primarily
security. The government is now realizing large profits from
the postal savings system--for 1916 the estimated profit was
$481,816--and this profit is coming from a class of people in
the community, the thrifty poor, from whom it is bad social
policy to take it. Of course it would be administratively
impracticable to pay interest to depositors on average daily
balances--no savings banks do that. Would it be expecting too
much, however, to ask for our postal savings depositors the
allowances of interest on half yearly or even quarterly
balances? Moreover, is it unreasonable to ask the Board of
Trustees, in view of the nomadic character of our
foreign-born population which patronizes the postal savings
system most, to devise a simple system of transfer by which a
depositor who is changing his place of residence may transfer
his postal savings account without forfeiting his accumulated
but yet undue interest?[30]
Not only should the postal savings bank law be amended, rendering it
more flexible and more attractive, but there should also be enacted in
those states in which no such legislation is yet on the statute books,
laws regulating the conduct of banks, steamship companies, and all
agencies receiving deposits or otherwise performing banking functions.
It is clear that the foreign born, during the early years of their
residence in the United States, encounter all the difficulties of
others whose incomes are inadequate and precarious, and are also the
easy victims of special forms of exploitation. In addition, they find
themselves unfamiliar with the standards and customs connected with
the great events of family life. In the matter of weddings and
funerals and other ceremonial occasions there is no reason to expect
them to be wiser, more economical, and farsighted than the native-born
group.
In the adjustment between future and present needs, foreign-born
housewives need, as most housewives need, instruction in the art of
spending, in the selection of food and clothing, and the variety of
demands for which provision must be deliberately made in a modern
industrial community. In an earlier and simpler situation provision
for these needs was made without conscious effort.
In this connection it is interesting to note that the "Thrift
Leaflets" prepared by the United States Department of Agriculture and
the Department of the Treasury for the war saving stamps thrift
campaign, urged care in the use of articles and dealt with prevention
of waste rather than with saving. Obviously, if goods were more
carefully used, more could be saved and invested in the securities
thus being indirectly urged. It is conceivable, however, that wise use
may mean the purchase of better food, the selection of more
satisfactory clothing, and the enjoyment of better housing, rather
than investment in government or any other securities. The thrift
campaigns of the United States Treasury proposed standards of saving
only for those receiving an income of $1,200 or more, with the
exception of unmarried persons earning as much as $780.