ESTABLISHMENT  OF  THE  SYSTEM

8

“Everywhere  the  banks  suddenly  found  themselves ­
  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  financial ­
  panics,  that  it  would  be  difficult  to  secure
cash  during  periods  of  economic  disturbance.
Add  to  the  hardships  of  this  panic  the  numerous ­
  recent  scandals  in  “high  finance,”  particularly ­
  those  connected  with  New  York  banks,  and
it  is  not  surprising  that  among  certain  classes  in
the  country  a  lack  of  confidence  in  banking  institutions ­
  should  have  been  manifested.  This  distrust ­
  of  banks  led  to  the  propaganda  for  the  guaranty ­
  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  Postmaster-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.