112 
POSTAL SAVINGS 
The tendency of the total number of depository 
banks to decline is due to a number of causes 
among which may be mentioned : ( 1 ) the plethora 
of moneyed capital during the past two years, 
which has made deposits of postal savings funds 
unattractive to many banks, requiring as they do 
the pledge of collateral and the payment of 2| 
per cent interest ; ( 2 ) the discontinuance of postal 
savings banks in many communities; 11 and (3) 
the legislation discriminating against banks which 
are not members of the Federal reserve system 
as depositories. This last item calls for further 
discussion. 
The Federal Reserve act, as originally enacted, 
contained a clause to the effect that no govern 
ment funds nor postal savings funds should be 
deposited in the continental United States in any 
bank not belonging to the Federal reserve sys 
tem. 12 This provision was construed by the At 
torney-General to permit the continuance in non- 
member banks of postal savings balances already 
on deposit, but to prevent the making of any fur 
ther deposits in such banks. 13 The discontinu- 
11 Supra, pp. 53-54. 
12 Sec. 15 of act. 
13 Concerning this subject the Third Assistant Postmaster- 
General said in his annual report for 1915 (p. 12): “No 
deposits have been made in non-member banks since Novem 
ber 16, 1914, the day the [Federal reserve] system went