ference
between this rate and that paid to individuals goes far toward paying
the expense of operating the system.
Provision is made for the issue of postal savings bonds in exchange
for certificates issued in sums of $20 or multiples thereof up to
$500. These bonds bear interest at the rate of 2-1/2 per cent payable
in semi-annual instalments, January 1 and July 1. These bonds are
not counted as a part of the $500 maximum of deposits allowed to one
person, and there is no limit to the amount of bonds which may be
acquired by one depositor. Postal savings bonds are exempt from all
kinds of taxes, federal and local. These bonds are issued only on the
surrender of postal savings deposits, but may be sold by the owner
at any time. Three years after the law went into effect, there were
$4,635,820 of postal savings bonds outstanding.
Sec. 8. #Advantages of the postal savings plan.# As compared with
corporate savings banks the postal savings system has certain
advantages.
(a) It protects the small depositors from the danger of dishonest
private bankers who have preyed upon the immigrants in the larger
cities. To foreigners, accustomed to the postal savings plan in their
home countries, it is especially useful.
(b) It gives to every depositor the greatest safety possible, as "the
faith of the United States is solemnly pledged" for the repayment of
depositors.
(c) It brings a savings institution to many a small town and rural
place formerly entirely lacking in facilities for small depositors.
The benefit of this has not immediately appeared to be great, but may
in time prove to be.
(d) It pays interest from the first of the month following the date of
deposit whereas the usual practice of savings and commercial banks is
to pay only from the beginning of the quarter year or half year.
(e) It provides for the exchange of deposits for bonds bearing a
higher rate of interest--a unique feature greatly simplifying for the
small saver the process of buying bonds for more lasting investment.
In some respects, however, the postal savings system falls short of
the advantages of the regular savings banks. These usually accept
for deposit as small an amount as ten cents; they pay interest either
quarterly or semi-annually; they pay on the average (at present)
almost double the rate of interest, and the interest is credited
to the depositor's account at stated intervals and automatically
compounded. The postal savings sys
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