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The Postal Savings System was established on January 1, 1911, by an Act of Congress of June 25, 1910. It was created to:
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Get money out of hiding. |
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Attract the savings of immigrants who had been accustomed to saving at postal mail facilities in their native countries. |
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Provide safe depositories for people who had lost confidence in private banks. |
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Offer the Post Office as a more convenient depository for working people. |
Although bankers first viewed the Postal Savings System as competition, they were later convinced that the system brought a considerable amount of money out from mattresses and cookie jars.
The system paid two percent interest per year, and the initial maximum allowable balance of $500 was raised to $1,000 in 1916 and to $2,500 in 1918.
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The System Grows
Deposits increased slowly at first, but by 1929, $153 million was on deposit in the Postal Savings System.
During the 1930s, savings spurted to $1.2 billion.
Deposits jumped again during World War II and peaked in 1947 at almost $3.4 billion, with more than four million depositors.
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The System Declines
After World War II, deposits in the Postal Savings System declined rapidly as goods became available to meet pent-up consumer demand. Banks raised their interest rates and offered the same government guarantee as the Postal Savings System (FDIC).
On April 27, 1966, the system stopped accepting deposits.
The Postal Savings System officially ended on July 1, 1967. About $60 million in unclaimed deposits was turned over to the Treasury Department to be held in trust.
Under a law of August 13, 1971, Treasury was authorized to turn the money over to the various states and jurisdictions involved.
The Postal Savings System Statue of Limitations Act, Public Law 98-359 of July 13, 1984, provided that "no claims for any Postal Savings System deposit may be brought more than one year from the date of the enactment of the Act," concluding this chapter in postal history.
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Did You Know?
The Postal Savings System, inaugurated in 1911, was at one time the largest single savings "bank" in the United States.
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