100

POSTAL  SAVINGS

decided  that  compound  interest  should  not  be  allowed. ­
  A  depositor,  however,  may  withdraw  interest ­
  payable,  and  then  immediately  redeposit  it
as  principal.  This  ruling  of  the  board  seems
petty.  Remembering  the  legal  limitations  on
maximum  deposits,  and  the  provision  of  the  law
that  interest  cannot  be  paid  on  fractions  of  a  dollar, ­
  it  is  difficult  to  see  justification  for  this  unusual ­
  ruling  against  compound  interest.  That
it  is  an  item  of  considerable  importance  will  be
seen  from  the  fact  recently  cited  by  the  Third
Assistant  Postmaster-General,  that  interest  allowed ­
  depositors  from  the  beginning  of  the  postal
savings  system  to  August  31,  1915,  amounted  to
$1,467,604,  of  which  amount  $877,412  had  been
applied  for  and  paid  by  postmasters,  and  the  remainder, ­
  $590,192,  had  not  yet  been  applied  for, 45
and  consequently  was  not  drawing  interest.  The
hai  dship  which  this  ruling  works  has  become
greater  since  the  interest-hearing  limit  was  raised
from  $500  to  $1,000.
A  second  ruling,  and  one  of  much  more  serious
moment  to  depositors,  is  that  no  interest  shall  be
paid  on  money  which  remains  on  deposit  for  less
than  a  year,  and  no  interest  shall  be  allowed  for
fractions  of  a  year  even  after  the  money  has  been
on  deposit  a  full  year.  There  is  a  certain  amount
45  U.  S.  Post.  Savs.  Sys.,  pp.  13-14.