THE POSTAL SAVINGS BANK ACT 
35 
Investment of Postal Savings Funds 
The most difficult problem which Congress had 
in formulating its postal savings bank plan in 
1910 was that of the investment of the deposited 
funds. In most countries postal savings funds 
are invested in the public debt, but such a dispo 
sition of them in the United States was out of the 
question because the United States public debt 
was small and was not looked upon as permanent, 
and because most of it was already tied up as 
security for national bank note circulation. There 
was a widespread belief both in Congress and 
outside that any feasible plan for the investment 
of postal savings funds must meet five require 
ments: (1) The investments must be safe. 
(2) Either all or a substantial proportion of 
them must be payable on demand since the postal 
savings deposits were to be demand deposits. 
(3) The investments must yield a sufficient rate 
of interest to pay the interest due to depositors 
and the expenses of administration. (4) The 
funds must be kept for the most part in the local 
communities where the deposits are received. The 
idea of the desirability of keeping “the money at 
home” was almost a fetish both among the advo 
cates and among the opponents of postal savings