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  disposition ­
  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  requirements: ­
  (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  advocates ­
  and  among  the  opponents  of  postal  savings