A People’s Bank at the Post Office

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Just an interesting look back in time.

A People’s Bank at the Post Office​

Post offices in the United States used to host the Postal Savings System. It was a form of non-profit savings bank and existed from 1911 to 1966. Historian Christopher W. Shaw tracks the “life and death” of this public bank, which gave “a measure of financial security” to small depositors and allowed for a “reimagining of the basic order of the financial system.”

“Millions of Americans deposited their earnings at the local post office,” Shaw writes, noting that

Read the rest:

 
That was done in the era of Sound Money - when a dollar saved, was still a dollar years later. Also in the era where we lived under moral standards - and while government is invariably corrupt, the LEVEL of corruption that we-the-people would tolerate, was far lower.

Older people who lived through the Bank Holidays of the 1930s, who lost everything, didn't trust banks. Didn't trust the new FDIC; but I guess they trusted the Post Orifice. Which doesn't make sense to me, but often people don't make sense.

But then, and now, people want INTEREST in return for the lack of immediate use of their money - and now, the risk endemic in placing it with others. But now in the era of fiat-money, interest - which has been missing from public banking for 16 years - even now, it is nowhere NEAR the level of price increases (the result of, but not itself, inflation).

Storing your money in a hidden cookie jar is foolish - for the loss of value - but safer than a bank. But to take the same risk as a bank, without any return, and with a government agency riddled with scandals, whose focus is on delivering letters and packages, not securing money...that's absurd.
 
The USPS cannot deliver mail and packages to the correct house anymore. Sending anything of value through that system is filled with risk whether it's from theft or sheer incompetence not to mention general craziness. At least that is the way it is from Jacksonville to Miami.
 
... the 1910 Postal Savings Bank Act was modest. The system could operate “only in designated post offices, redeposit its funds in existing banks, and pay a noncompetitive 2 percent interest rate,” Shaw writes. There was also a $500 deposit ceiling. And virtually no money was ever spent on publicizing the service.
...
Then came the Great Depression. Between 1930 and 1933, more than 9,000 banks failed across the country, as “falling asset values, loan defaults, heavy withdrawals, illiquidity, and mismanagement” contributed to an unprecedented banking crisis. Bank deposits fell from $59.8 billion to $45.9 billion during this period. At the same time, postal savings deposits “skyrocketed from $164 million to $902 million.” ...
...
Bankers’ representatives in Congress finally managed to end postal savings in 1966, when the system was still being used by a million depositors.

The full reserve bank was popular when fractional reserve banks were failing. I don't think it was coincidental that the full reserve postal bank was ended at roughly the same time that sound money was ending (one year after The Coinage Act of 1965 which removed silver from the coinage and a few years before Bretton Woods in 1971).
 
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