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ASHINGTONi U. C (Special Corre
Bpondence of The Bee.)- Do you want to
open an account with Uncle Sam,
banker? You can do It at several hun
dred places over the union. A thousand
or more banks will have been established
by the time this letter is published, and
this number will be extended until It covers
the 40,000 and odd money order postofflces tdroughout
the United States. The postal savings bank bill was
passed only last congress, and the business was started
with 1100,000, This was to. establish forty-eight
banks, each state having one. When congress met
again In the spring more banks were started. Forty
five additional ones were in operation in April, thlrty-
alz more were added in June, and from that time .
on they have gone ahead at the rate of fifty per week.
At the beginning of the year the forty-eight which
were first started had taken in only about $75,000.
but with the new banks the deposits have quadrupled,
and they will soon amount- to a million dollars or
BHsre.
Two Billions of Hoarded Treasure.
Indeed, it Is Impossible to prophesy how much
money will come Into the postofflces. The amount will
run into the hundreds of millions. It can do that and
till not affect the banking institutions which we have
today. The officials of the Treasury department, who
keep track of the money In circulation and In the
banks,1 say that there is an, enormous sum not ac
counted for which lies idle, either In htdlng or in the
pockets of the people. This amount is more than
two thousand million dollars. It is enough to give
$100 to every famlluy In the United States and
enough to buy the Steel trust and leave something
over for a few railroads or so. It Is about 2 per cent
of the aggregate wealth of the nation, and if it could
be collected together into one pile. It would almost
pay the national debt twice over. Take it out of
hiding and turn It Into government bonds and We
should not have to borrow a cent from outside na
tions, and at the same time would have enough sur-'
plus capital to complete the Panama canal and dig a
ditch big enough for the largest ocean steamers from
the Great Lakes to the gulf.
Similar hoards have existed in all countries, al
though nowhere to such an extent as in ours. We
are the richest of the nations, and we have more
loose money than any of the others. Take for In
stance the Hindus, where the standard is so low that
you can hire a man for 10 cents a day, and where
many of the people figure on how much they will
eat for supper in order to know whether they '.rill
have enough left for breakfast. That country is
known to have a hoard In gold or silver or Jewels
hid away under Its floors, and since the British gov
ernment has established postal savings banks there
$600,000,900 have been taken out and deposited, and
the accounts in the postofflces are almost" one mil
lion in number.
Uncle Sam's New Banking System.
But how about taking care of a business like this?
Think of the work of handling 40,000 different
banks, each of which has hundreds of deposit ac
counts! Think of the deposits and withdrawals, of calcu
lating the interest and of keeping the accounts, where
the Iobs of a cent in the balance may set a clerk
crasy, as Is common in the banks of today!
These are some of the troubles that are agitating
the other nations which have similar banks and are
eosting them millions. It is so in Great Britain, where
a big building at London is devoted to keeping the
books. . The banks have been in operation there for
twenty-five years, and the separate accounts are one
million in number, while the total deposits now equal
$781,000,000. The cost of the machine la such that
I understand the business is run at a loss. Similar
books are kept In France, Germany and In nearly
every civilized country on the face of the globe.
This was one of the difficulties which faced Uncle
Bam when he took hold of the problem. Our postal
aavlngs bank business Is bound to be twice as large as
that of any other nation, and should we carry It on In
the same way, Mr. Theodore L. Weed, the chief clerk
pt the Postoffice department and the secretary o the
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Plans for Managing New Postal Savings Bank
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board of banking trustees, tells me we should have
to establish, in time, a great accounting system here
at Washington, with a great force of clerks to keep
track of the moneys In these thousands of offices scat
tered over more than three million square miles.
Nevertheless, we have begun the business without
a cent of additional expense for clerical hire. And
moreover, the prospect is that it will be carried on
without any material change In our government ma
chinery when the deposits are hundreds of millions,
and that at an expense which, In the light of its cost
to other nations, will be ridiculously small.
An Idea Worth Millions.
For the invention which has done away with this
enormous bookkeeping, Uncle Sam Is Indebted to Mr.
Frank Hitchcock, his postmaster general. It Is an In
vention worth millions, for It is estimated that It will
save at least a million dollars a year to the govern
ment. It will certainly do away with the possible
employment of 2,000 bookkeepers, which even at as
low a salary as $1,000 a year, would make an annual
draft on the treasury of $2,000,000, and that in ad
dition to other machinery which would greatly add to
the total. Mr. Hitchcock conceived the Idea during
his trip to Europe last summer. He there saw the
complicated machinery of other nations, the most of
It based on the system devised by Gladstone, which
has been adopted by forty other countries. This was
the use of the passbook, which In England meant
the posting of the deposit books of 15,000 offices, and
of keeping sets of books for them. It Involved the em
ployment of 2,000 clerks In London, and of a great
bookkeeping establishment there. In our own country
the offices would surely be three times as many as In
Great Britain, and they will probably be 60,000 or
60,000 or more. To handle them on the European
system was evidently very expensive, and Mr. Hitch
cock, in working over the matter, originated a plan
whereby the accounts would to a great extent keep
themselves, and that without mistakes.
Certificates vs. Bank Books.
This plan was the wiping out of the passbook, and
the issuance of drafts or certificates of deposit. This
has been Installed, and it is the present system. The
depositor bands In his money, but in place of having
a credit made on a bank book he is given a certifi
cate of deposit for the amount he puts in.
The certificates are In the denominations of $1, $2,
$5, $10, $20, $50 and $100, and they bear Interest
at the rate of 2 per cent per annum. They are neither
transferable nor negotiable, and are not worth any
thing except in the bands of the person buying them.
They are issued In ' duplicate, and the original and
duplicate must each bear the signature of the de
positor. The duplicate Is retained by the postmaster
and if the man would withdraw his deposit he must
bring back the original, and sign his name in the
presence of the postmaster, who compares it with
the signature on the duplicate. It is after Just the
same method that the traveler's checks issued by
banks and express companies are cashed all over the
world today, and the same as that used In letters of
credit. One might forge another man's signature,
but It takes great skill to make such a forgery offhand
In the presence of the man you are trying to de
fraud. If a certificate of deposit should be lost or de
stroyed it can be duplicated by applying to the post
master, the signature, made In this way, being evi
dence of the claim. The postmaster keeps a record
of these duplicates, not In a book, but In a set of
manlla Jackets or envelopes after the card Index sys
tem, each manlla Jacket bearing the name of a de
positor and having in It that depositor's duplicates.
It Is as simple as rolling off a log.
It la Foolproof.
Again the need of bookkeeping Is avoided by the
fact that deposits are made only in multiples of one
dollar; and that the money has to be left in one year
to draw interest, the interest beginning only oa the
first day of the month. The depositor knows that if
he takes out any money in less than a year he loses
his interest. If he leaves It in for one year he gets
2 per cent; and he must leave it la two years to get
4 per cent. In other words, tnere are no rracuons
to be considered. The system seems to be foolproof,
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The depositor knows just what is coming to him. He
can draw as much or as little as he pleases, provided
the denominations are right; and when his money is
all drawn the tearing up of the manlla Jacket closes
the account and wipes his name from the government
rolls. In fact, there is no other record.
v Not Intended for Millionaires.
These banks are not intended for millionaires. In
fact, the most that any one can have on deposit at
any one time Is $500; and it is not passible to de
posit more than $100 in any one month. When the
first forty-eight banks were opened many farmers
came in with sums ranging from $1,000 to $10,000,
and were surprised when they were told that only
$100 could be taken per month. One old woman
called at the Postoffice department here in Washing
ton. She had a big fat pocketbook with her, which
contained the savings of years. She said that she
had lost her money in a private bank failure twenty
five years ago and that since that time she had been
praying for a government bank where her funds would
be safe.
At one of the other stations two farmers brought
in two canvas bags of coins, which together held more
than $3,000, and asked to deposit it; while at Dubois,
Pa., a German miner offered $1,700 and was sur
prised when the postmaster would accept only $100.
At Ashtabula, O., a woman deposited $100, and said
she would return monthly until her account had
reached the limit; while at the same office a man who
was refused the chance to put in $500 at a lump said
he did not care to open an account where the money
went in on such small Installments.
A Chance for Women and Children.
These banks will be patronized by the women and
children. The laws provide that a husband has no
control of the deposits made by his wife, nor guardians
any control over those made by their wards. Even
the children can deposit, and their parents cannot get
the money, except by their consent and by their sig
natures in the presence of the postmaster. Any boy
who has a dime may begin an account by buying a
Bargain Counter
"Don't keep a rag-bag," was the fundamental
motto of A. T. Stewart That pioneer American mer
chant prince was accustomed once a week, and some
times oftener, to go up and down the aisles of his
store, stopping at various counters and fingering dry
goods or fancy goods or the many little articles dis
played on the notion counter.
"How is this article selling?" or, "What is the de
mand for these goods.?" he would ask. If the reply
was that the article 'or goods In question was selling
rapidly Mr. Stewart would say no more, but pass on.
But if he discovered that the demand was falling off
for a certain article or a certain line of goods, or else
that there was not a ready sale for the articles or
goods because of the price, he would say: "Put these
things on a special table and mark the price down
until you can sell them. Don't keep a rag-bag." -
It was this rule or motto that gave rise to the
bargain counter, as we know it today; and In his long
career as a merchant it enabled him to turn every-
Ihlnf he had to sell Into cash as speedily as possible,
SAMS JVUm C&RKLEJZS ZZST ALAsSEA
postal savings card, upon which he can paste nine
other 10-cent postal saving stamps, which he may
buy as he gets the money. When the 90 cents' worth
of stamps have been stuck on the card it represents a
dollar, and may be exchanged for a dollar deposit
draft at the postoffice. His name then goes into a
manlla Jacket and he is one of the patrons of Uncle
Sam's great banking system.
Suggestion for the Benevolent.
In all places where the banks have been established
many children are among the depositors. In some
Instances postmasters have been asked to address the
public school children on the system, and school teach
ers from all parts of the country are writing the de
partment for Information concerning it. At one of
the Pennsylvania offices a boy has opened an account
In order that he may have a start in life when he is
through school, and In other places men are opening
accounts for children and starting them on the way to
save. One philanthropic man In Owensboro, Ky., baa
purchased postal savings cards for all the public school
children of that town, his idea being to encourage
thrift through the use of this government system. This
seems to be an excellent idea, and I suggest It to such
of you as have a charitable dollar to put It where It
will bring big results. Take a village or town which
has a thousand school children. An investment of
$100 In these 10-cent postal saving cards would start
the children of that whole town to saving, and would
be better charity than the pauperizing, indiscriminate
gift-giving which is so common today. One might
take the children of a single school or class and do
the same. Indeed, this system of giving is subject to
countless variations.
Government Bonds for Savings Bank Depositors.
Connected with the postal savings bank act Is a
provision by which the certificates of deposit may be
used to buy government bonds. This went into effect
the 1st of July, and many bonds have already been
purchased. The law provides that postal savings, in
the sums of $20, $40, $60, $80 and $100, and mul
tiples of $100 and $500, may be turned In for bonds,
which shall be In the above denominations, and shall
bear interest at the rate of iy per cent per annum,
payable semi-annually. These bonds cannot be
bought except by postal savings bank depositors, but
they are so arranged that any one can have a part
in the government debt of the United States, and can
own a government bond. They will be sold to such
depositors at par. They are exempt from taxation,
and they will probably have a market value some
what higher than at the rate they are sold to de
positors. This, It is thought, will add to the stability
of our government. Every man who owns such a
bond will want to support the government and will
feel that he has a part in It. t will probably result
in a great part of our bonds, which are now held by
the rich, here and in other countries, going Into the
hands of the people.
Patronised by Foreigners.
So far we have thousands of foreigners who have
been taking out deposits In these new postal savings
banks. These men know the postal savings banks of
their own countries, and they have faith in ours be
cause they are backed by the government Postmaster
General Hitchcock tells me that vast sums have an-
aually been sent abroad by the foreign element of this
country In order that they may be deposited In the
banks of Europe. Some of this goes to the banks di
rect and some is sent to friends, who put It in the
postal savings banks of their respective countries.
In the four years ending with 1909, more than
$312,000,000 of such money orders were issued, and si
large part of them were for savings deposits. Now
that the postoffice bank has been established a great
deal of this money will f,o into it. This has been the
case In the banks opened In the mining camps, where
many foreigners are employed. It is so, also, in the
milling centers and in all laboring towns. At one of
the Pennsylvania offices a group of foreigners, both
men and women, called to see the postmaster, and on
being informed that they could only deposit $100
each they went away saying: "No good to us. Take
too many months to make deposits, come back when
government gets bank fixed better way."
Wanted to Pay the Postmaster.
At Frostburg, Md., an Italian who deposited $50 of
fered to pay 60 cents for the certificate, and when he
was told it did not cost anything and that his deposit
would also draw interest, he was much pleased. At
an Ohio office a Syrian woman tried to deposit $370,
and at Orovllle, Cal., a number of foreigners offered
from $1,000 to $2,000 each,' which, of course, was
impossible. At Ashtabula, O., a foreigner came from
Palnesvllle with $800, and at Globe, Ariz., the post
master says that his depositors rank as to the amount
of money held as follows: American, English, Aus
trian, German, Russian, Mexican and Swedish. At
many of the places interpreters have asked for
literature on the system, saying that they want to ex
plain It to the foreign laborers of their settlement,
while at Dubois, Pa., two priests of foreign churches
there are studying the system, and say they will
spread the news among their flocks.
It Runs Easy.
In my talk with the postmaster general and the
officials In charge of the bank here at Washington I
have been shown the system and the accounts of Its
operation to date. The Increase in number of de
positors and amount of deposits Is rapidly growing
and that as to every branch of the business. The de
posits of the stations first opened have a larger ratio
of Increase every week, and the growth at the new
stations is proportionately rapid. At the present Is
sue the deposits at the forty-eight original postofflces
at the close of a year from their date of opening will
amount to over $800,000, and If the system should
be extended to all the money order offices It will at
the same ratio at the end of the first year thereafter
have something like $200,000,000 on deposit.
In the building of new postofflces the government
will put In special offices for the savings banks. This
will be the case In the new postoffice at Washington,
D. C, which is soon to be built, and eventually sim
ilar arrangements will have to be made in all the
large cities.
The most surprising feature of the work so far Is
the ease with which It Is handled. The new banks
are running without complications. There have been
no objections from the local savings Institutions and
the postofflces promise to bring a vast amount of new
money Into circulation. Indeed the postal savings
bank Is the greatest financial success of this adminis
tration. FRANK O. CAEPBNTEJJi
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