POSTAL CHEQUE SYSTEM. 
REPORT OF A COMMITTEE OF THE POST OFFICE 
ADVISORY COUNCIL. 
REPORT. 
In accordance with the wishes of the Council at the 24th meeting 
held on December 15th, 1926, we have considered the question of 
instituting a Postal Cheque System in this country and we report 
as follows :— 
1. Inquiry into Existing Systems.—As a preliminary to our 
investigations a questionnaire was circulated to the leading con- 
tinental countries using Postal Cheques. Summaries of some of the 
figures collected are attached as appendices to this report. 
2. Success of Postal Cheque Systems Abroad. —From these figures 
and from other information obtained it appears that the Postal Cheque 
System operates on a widespread basis in these countries and in most 
cases is run at a profit. -It is noteworthy, however, that in Germany 
where Postal Cheques have been most developed losses have been 
sustained, which are understood to have amounted to the considerable 
sum of 16,000,000 R.M. in 1926 and to a similar large figure in 1927. 
3. Factors in Profitable Working. —It is evident that the financial 
success or otherwise of a Postal Cheque System turns very largely 
apon the interest on current balances which is credited to the system 
and consequently upon the size of the average balance kept in the 
individual accounts. Where this is comparatively large, expenses 
can be met with the addition of reasonably low charges upon 
individual transactions. But if the average balance is small, the 
system can only be made to pay its way by raising the transaction 
charges to an unduly high level. 
4. Development of Banking on the Continent.—In continental 
countries commercial banking facilities are less developed than in 
this country. Not only are there fewer branch offices per head of 
population but the procedure of payment and acceptance of cheques 
is in some cases encumbered by additional formalities and delays. 
The Clearing House system is only in embryo on the continent and 
the number of ordinary cheques in use, so far as can be ascertained, 
is very small compared with those circulating in this country. Postal 
Cheque facilities consequently are likely to attract a greater number 
of good accounts in continental countries than in Britain where the 
needs of a considerable section of the moneyed population are already 
catered for. Unless, therefore, the facilities offered by a Postal 
Cheque System in England were such as to compete advantageously 
with commercial banks or to break fresh ground, it seems probable 
(13497C) Wit. 7972/4541 2000 7/28 Harrow G.811