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DEPOSITORS  AND  DEPOSITS

81

so  withdrawn,  it  was  said,  would  not  flow  back
quickly  to  the  local  banks,  because  the  postal
savings  bank  law  required  local  banks  to  pledge
as  security  for  the  deposit  of  postal  savings  funds
high  grade  securities  supported  by  the  taxing
power.  How  could  the  banks  in  times  of  panic
obtain  money  to  purchase  such  securities?
The  advocates  of  postal  savings  did  not  take
such  a  gloomy  view.  In  fact  they  declared  that
postal  savings  banks  would  strengthen  the  financial ­
  situation  in  times  of  panic.  That  at  such
times  the  public  might  withdraw  money  from
other  banks  and  deposit  it  in  postal  savings
banks  they  conceded,  but  they  said  this  money,
as  soon  as  it  was  deposited  in  a  postal  savings
bank,  would  be  redeposited  by  the  latter  in  a
local  bank.  The  net  result  would  be  that  the
money  withdrawn  by  timid  depositors  would  not
be  hoarded,  as  formerly,  but  would  be  returned
promptly  to  the  local  banks  whence  it  came.
From  the  depositor’s  point  of  view  the  result
would  be  a  loss  of  interest  but  the  securing  of  a
virtual  Government  guaranty  of  his  deposit.
The  local  banks  would  have  the  same  money  they
had  before,  only  the  Government  would  be  the
depositor  at  2j  per  cent  interest,  instead  of  the
individual  at  a  presumably  higher  rate.  The  alleged ­
  difficulty  of  securing,  in  times  of  panic,