100 
POSTAL SAVINGS 
decided that compound interest should not be al 
lowed. A depositor, however, may withdraw in 
terest payable, and then immediately redeposit it 
as principal. This ruling of the board seems 
petty. Remembering the legal limitations on 
maximum deposits, and the provision of the law 
that interest cannot be paid on fractions of a dol 
lar, it is difficult to see justification for this un 
usual ruling against compound interest. That 
it is an item of considerable importance will be 
seen from the fact recently cited by the Third 
Assistant Postmaster-General, that interest al 
lowed depositors from the beginning of the postal 
savings system to August 31, 1915, amounted to 
$1,467,604, of which amount $877,412 had been 
applied for and paid by postmasters, and the re 
mainder, $590,192, had not yet been applied for, 45 
and consequently was not drawing interest. The 
hai dship which this ruling works has become 
greater since the interest-hearing limit was raised 
from $500 to $1,000. 
A second ruling, and one of much more serious 
moment to depositors, is that no interest shall be 
paid on money which remains on deposit for less 
than a year, and no interest shall be allowed for 
fractions of a year even after the money has been 
on deposit a full year. There is a certain amount 
45 U. S. Post. Savs. Sys., pp. 13-14.