April 17 — While the inaugural address of President Taft was received throughout the country with many expressions of praise it is greatly to be regretted that he took occasion to endorse the Postal Savings Bank theory. It is easy to see that he as induced to make a reference to Postal Savings Banks by reason of the fact that the platform upon which he has been elected contained a plank endorsing such a system. President Taft's statement is as follows:
"The incoming Congress should promptly fulfill the promises of the Republican platform and pass a proper Postal Savings Bank bill. It will not be unwise or unsafe paternalism. The promise to repay by the Government will furnish an inducement to savings deposits which private enterprise can not supply and at such a low rate of interest as not to withdraw custom from existing banks. It will substantially increase the funds available for investment as capital in a useful enterprise. It will furnish an absolute security which makes the proposed scheme of Government guaranty of deposits so alluring without its pernicious results."
This argument is simply a restatement of ex-Postmaster-General Meyer's argument, who is now Secretary of the Navy. This fallacy has been exposed a number of times. There is not the slightest ground to suppose that Postal Savings Banks would induce any material amount of deposits that would not otherwise have gone into existing banks. All arguments in favor of the Postal Savings Bank system presuppose either a dangerous or unsafe condition of existing banks, or a lack of savings banks to meet the wants of the people. That the first of these two propositions is absolutely incorrect is shown by the fact that losses through failures of savings banks throughout the United States have been so infinitesimally small as to scarcely warrant mention. In comparison with all other classes of business the loss from savings banks of the country are of no concern whatever.
That the second proposition has no force has been simply demonstrated in the splendid address of Lucius Teter, president of the Chicago Savings Bank, and ex-member of the Savings Bank Section of the American Bankers' Association, wherein he demonstrated that instead of there being some 1,200 or 1,300 savings banks in the United States, as claimed by ex-Postmaster-General Meyer in his report to Congress with some $3,500,000,000 deposits, fully two-thirds of the active banks in the country, or nearly 15,000 banks transact a regular savings business, and that the savings deposits of the country are nearly $7,000,000,000, or almost double the figures fixed by the Postmaster-General. It is evident, however, that there is danger of such a bill passing Congress, unless the bankers' associations of the United States keep up an active campaign of education on the subject.
The question should have a place on the program of every bankers' convention during the year, and earnest resolutions should be adopted protesting against the passage of such legislation in Congress. A very important question has lately been raised as to whether legislation authorizing the establishment of a system of Postal Savings Banks would be constitutional. The Constitution of the United States conferred upon Congress the right to establish post offices and post roads. At the time the Constitution was adopted there was not a Postal Savings Bank in existence in any place in the then known world. It is ridiculous to suppose that the framers of the Constitution had the slightest idea when they conferred upon Congress the power to establish postoffices [sic] and post roads that they were thereby authorizing Congress to establish a system of banks, or authorized the Government of the United States to enter into a banking business with some 60,000 or 70,000 branch banks. The establishment of post offices and post roads was conferred upon Congress because it was evidently absolutely essential that letters should be sent from one State to another, and the framers of the Constitution saw how inconvenient it would be to have each State provide its postal regulations, they therefore withdrew from the States the power to establish post offices and post roads and conferred it absolutely upon Congress.
