Postal Savings Banks

Postal savings banks versus enforced insurance of deposits

William Howard Taft's speech centered around postal savings banks.

https://www.loc.gov/item/jukebox-126595/

The imminence of the postal savings bank. The imminence of the postal savings bank. The imminence of the postal savings bank.

Speech by banker E. R. Gurney against postal savings banks.

Postal savings banks were a cornerstone of the populists platform and adopted by the Nebraska democrats in the Omaha platform. People had a hard time trusting the banking industry during the gilded age, and sought for a safer alternative. In response to this concern, some believed that the solution was a postal savings bank. The purpose of a postal savings bank was so that citizens could put their money somewhere (post offices; essentially with the government) that wasn't looking to make a profit off of it like banks were. Therefore, the fight for a postal savings bank began.

Naturally, this policy received a lot of pushback. Many with nothing to gain had legitimate concerns over such a system, worrying it would give the government too much power. Others, were just looking out for their own interests. Most of these people were the bankers, who had a lot to lose if there was a government takeover of the industry. People such as E. R. Gurney worried that such a fate was imminent. In a speech, he states that the American banking system "is one of the axioms of finance that plentiful and cheap money is the greatest supporting agency known in the maintenance of prices and the development of industry, and this the American banking system affords in marvelous measures"6.

Gurney goes on to speak to the competition between existing banks and the theoretical postal savings banks. He said that he worried about a situation where the severe competition would cripple existing banks to the point they could not serve their customers6. Postal savings banks were proposed as an alternative to normal banking, not as a complete replacement. This means his worries were in fact warranted, as the increased competition would bleed them of their capitol until they were underfunded to serve their people's needs. Arguments like this shed some light on how this could have made the situation worse.

In an attempt to find solutions to American's issues with the current banking system, William Howard Taft joins in on the conversation. He argues that he and the Republican party are in favor of such a system, as it has been tried in many countries before and proved to be a success7. Democrats at this time were more in favor of a system in which banks were regulated in order to enforce the insurance of deposits, as stated by Taft7. This shows the division of the country on this issue, as well as the division in the Democratic party because the Nebraska Democrats who followed the Omaha platform were in favor of such a system.

In the end, Taft did create a postal savings system. The populist influence in the country was being seen in full force. Although the party itself was not anywhere to be seen, they managed to get their agenda pushed to the forefront of American politics. Postal savings banks were a success at the start, but saw a decline in usage as the years went on. This was not because the system was flawed, but rather banks became more regulated and were forced into insuring deposits, making the postal savings bank system relatively useless.

6. Gurney, E. R. The imminence of the postal savings bank An address delivered before the Wyoming Bankers association by E. R. Gurney. vice-president of the First National bank of Fremont, Nebraska ?. 1910. Pdf. https://www.loc.gov/item/rbpe.18903700/.

7. William Howard Taft: Author, and William Howard Taft: Speaker. Postal Savings Banks Versus Enforced Insurance of Deposits. 1908. Web.. https://www.loc.gov/item/jukebox-126595/.