ESTABLISHMENT OF THE SYSTEM 
8 
“Everywhere the banks suddenly found them 
selves confronted with demands for money by 
frightened depositors; everywhere, also, banks 
manifested a lack of confidence in each other.” 5 
There was a widespread belief among the people, 
a belief based on sad experience in previous finan 
cial panics, that it would be difficult to secure 
cash during periods of economic disturbance. 
Add to the hardships of this panic the numer 
ous recent scandals in “high finance,” particu 
larly those connected with New York banks, and 
it is not surprising that among certain classes in 
the country a lack of confidence in banking insti 
tutions should have been manifested. This dis 
trust of banks led to the propaganda for the guar 
anty of bank deposits and to a renewal of the 
agitation for postal savings banks. Postmaster- 
General Cortelyou, in his annual report for 
1906, 5 had merely mentioned postal savings 
banks in connection with other projects, “the 
merits and defects ... of which should have in 
the not distant future the fullest consideration.” 
In the three succeeding annual reports the Post 
master-General strongly urged the establishment 
of postal savings banks. Before the panic of 
6 O. M. W. Sprague, History of Crises under the National 
Banking System, National Monetary Commission Report, 
Sen. Doc. No. 538, 61 Cong., 2 Sess., pp. 259-260. 
6 Report of the Postmaster-General, 1906, p. 81.