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Virginia TRIANGULAR DEBATE BETWEEN * § Tulane University of Louisiana University of North Carolina AND University of Virginia Resolved, That postal savings banks, as described in the Carter Bill as ordered reprinted on January 6, 1909, should be established by the United States Government TULANE UNIVERSITY OF LOUISIANA NEW ORLEANS 2 s . ; .SVC)*s ! On Saturday night, April 24, 1979, took place a tri- angular debate between the Tulane University of Low- isiana, the University of North Carolina, and the Univer- sity of Virginia. Tulane debated North Carolina in New Orleans, and Virginia at Charlottesville, Va. North Car- olina debated Virginia at Chappel Hill, N. C. Against Virginia, Tulane spoke in favor of postal savings banks and won the debate by a vote of two to one. In New Or- leans, Tulane spoke against postal savings banks, and lost by a vote of two to one. At Chappel Hill, Wirginia, spoke in favor of postal savings banks, and gained the unanimous decision of the judges. The Tulane Oratofºcal and Debating Council prints in this pamphlet the speeches of the Tulane speakers in the triangular debate. The speeches are given in practically the same form as delivered on the night of the contests, but the rebuttals, being given in answer to arguments presented by the opponents, touch only up” the salient points actually raised in the respective deb” TULANE ORATORICAL AND DEBATING COUNCIL. TULAWE UNIVERSITY OF LOUISIAAWA, New Orleans, 205380 SUBJECT FOR DEBATE, RESOLVED, That postal savings banks, as described in the Carter Bill as ordered reprinted on January 6, 1909, should be established by the United States Government. TULAN E-VIRGIN IA DEBATE. Tulane, Virginia. (Affirmative.) . (Negative.) CHARLEs E. DUNBAR, JR. JAMES W. CURRIE. ESMOND PHELPS. W. G. DEARING. DELVAILLE H. THEARD (Alternate). M. L. WALLERSTEIN (Alternate). JUDGES. DR. JACOB Hol.I.ANDER, Johns Hopkins University. J. C. METCALF, Richmond College. DEAN WILBUR, George Washington University. TULAN E-NORTH CAROLINA DEBATE. North Carolina. Tulane. (Affirmative.) (Negative.) LUTHER PRESTON MATTHEWS. NICHOLAS CALLAN. HORACE EDNEY STACY. HERBERT W. KAISER. A. EAGER ARNOULT (Alternate). JUDGES. FION. T. MARSHALL MILLER. RABBI MAX HELLER. tº JUDGE JOSHUA BAKER. 5 SPEECH OF CHARLEs E. DUNBAR, JR., IN THE TULANE- VIRGINIA, DEBATE. The question of postal savings depositories is of live interest in the United States at this time. A plank call- ing for such institutions was a part of the Republican platform in the last Presidential election, and the Demo- cratic party, although favoring the guarantee of bank deposits, proposed postal savings depositories if the former was not practicable. The establishment of a sys- tem of postal savings depositories adapted to the needs and suited to the conditions of this country, was recom- mended as early as 1870 by Postmaster-General Creswell, by Postmaster-General Maynard in 1880, by Postmaster- General James in 1881, by Postmaster-General Howe in 1882, and by Postmaster-General Wanamaker in 1889 and 1890. Numerous bills have from time to time been introduced in both houses of Congress. In brief outline the Carter Bill, which we are consider- ing, provides that the 40,000 money-order postoffices scat- tered over the United States shall receive savings de- posits, and that the Government shall guarantee the pay- ment of these deposits on demand; that no individual shall have more than one account, and that no account shall exceed $1,000, no more than $200 of deposits being allowed in any one month. It provides, also, that two per cent. interest shall be paid by the Government on de- posits not exceeding $500, and that the postal deposits shall be redeposited in the nearest national bank at not less than two and one-quarter per cent., thus gaining a sufficient return to pay the expenses of the system, and also keeping the funds in the same locality where they will be lent for the industrial development of that region. We of the affirmative are going to show you that we should adopt postal savings depositories, as provided for in the Carter Bill. FIRST. Because postal savings depositories will give further savings facilities to a large class of people who have not at present proper opportunities for saving. 6 SECOND. Because the Government guarantee of abso- lute security to depositors in postal savings depositories will make even the most suspicious man in the United States certain that his savings deposits are secure, and will thus encourage saving and bring into circulation large sums of money now hoarded by distrustful and fear- ful people. THIRD. Because postal savings depositories will be a bulwark of defense against financial stringencies and panics. FourTH. Because postal savings depositories, giving this protection against panics, further savings facilities, and absolute security, will benefit our people, our indus- trial prosperity and the strength of our Government. There are speaking broadly two classes of people in the TJnited States who are in need of postal savings deposi- tories. First, those who cannot save because they are in thinly-populated sections with no banks to receive their deposits, and, secondly, a certain class of Americans dis- trustful of private banks and a large number of foreign- ers who have confidence only in the Government. First, then, there is a great need for further savings facilities in broad, thinly-populated sections of our coun- try, and postal savings depositories will supply this need, while all of the existing banks put together do not. What are the different forms of existing banks and the savings facilities which they offer? The 1,400 mutual savings banks, the original savings banks of the country, are confined chiefly to the New England States. Over one-half of them are in four States, representing only one twenty-ninth of the area of the United States. Of the 6,800 national banks in the United States the Comp- troller of the Currency reports that only 1,900 show Sav- ings deposits at all, and that three-quarters of these 1,900 are in the New England and Middle States, representing only one-fifth of the area of our country. As for private and State banks, including trust companies, the larger part of their deposits by far are not of a savings, but of a commercial, character, and with them we are not con- 7 cerned. Statistics showing the exact number receiving Savings deposits are not available; but in any case they cannot modify the showing just made. Nevertheless, to show even more vividly the great need for postal savings deposits to encourage thrift and frugality in large unde- veloped sections in the South and West, let us just for the Sake of argument make a supposition ridiculously gener- ous to our opponents. Let us suppose that every one of the 21,000 banks of the United States—mutual, State, private and national—were all savings banks. Even if this were true the people in the thinly-populated South and West would still be greatly in need of savings facili- ties, for, even supposing that every bank was a savings bank, there would be an average of one bank to every fifty-seven square miles in the New England States, one bank to every forty-two square miles in the Eastern States, one bank to every one hundred and fifty-four Square miles in the Southern States, one bank to every one hundred and ninety-six square miles in the Western States, one bank to every five hundred square miles in the Pacific States. The question is, remember: Do the savings banks of the South and West provide, or are they likely in the near future to provide, adequate opportunities for the deposit of savings? These figures which we have cited from the census report and the Comptroller of the Currency, based on the supposition that every bank in the United States was a savings bank, give the answer. We find, in short, that one bank in the Western States must Supply a popu- lation scattered over four times the area that is supplied by one bank in the New England and Eastern States. One bank in the Southern States must supply a population scattered over three times the area supplied by one bank in the New England and Eastern States. One bank in the Pacific States must supply a population Scattered over ten times the area supplied by one bank in the New England and Eastern States. We may be told that the number of banks in proportion to the population is about the same in the New England and Eastern States as in 8 the Southern and Western States. This is true, but wholly irrelevant, for it is not at all a question of popula- tion, but of area, or, still better, of the distance of the people from the banks. Now, the area of the New Eng- land and Eastern States is 173,973 square miles, while the area of the Southern and Western States is 2,796,061 Square miles. In other words, a bank in the South and West has to supply fifteen times as many square miles as the bank in the New England and Eastern States. Now, ladies and gentlemen, the community makes the bank; the bank does not come first and make the community. Private capital seeking solely private gain cannot afford to estab. lish banks in these thinly-populated sections. The postal savings depositories provided for in the Carter Bill will supply this need, for there are 40,000 money-order post- offices in the United States—more than twice as many as there are banks of every description. Either the Gov- ernment must use the numerous postoffices scattered over the country, which are convenient to everyone, to supply the lacking facilities and to encourage habits of thrift and frugality, or else these immense regions must continue without such facilities, encouragements and habits. Plainly, by adopting postal savings depositories, we will not only benefit the individual by making him more se- cure against old age and sickness, more independent and progressive, but we will promote the industrial prosperity of the entire country. Our second main point is that postal savings deposi- tories will offer absolute security, and this security is what is demanded and sorely needed by the other numer- ous class of people I mentioned. Money is hoarded by great numbers of Americans who are distrustful of pri- wate banks; and our large foreign population, accustomed to postal savings depositories abroad, have confidence in the Government, and the Government alone. At the slightest symptom of stringency, these ignorant or timid persons and small depositors, both American and for- eign, withdraw and hide cash, thereby checking industrial 9 prosperity, precipitating panic, and thus imperiling the welfare of the entire nation. Frequent bank failures have made them distrustful of private institutions, and they keep their money in hiding; whereas, it is absolutely essential to the highest financial prosperity that they should deposit it in banks. Postal savings depositories will not only provide adequate facilities, but positive se- curity, and will soon, therefore, bring this hoarded money into circulation. Our opponents will, no doubt, contend that bank failures have not brought any very great loss to depositors. We answer that the influence of these bank failures inspires this distrust. It makes no differ- ence if the actual loss be small as long as the fear of that loss is great. The fact is that there is a large amount of money hidden away by people who do distrust private banks, and it is unnecessary to discuss whether this distrust be reasonable or unreasonable. Here are the figures of the Comptroller of the Currency as to the amount of this hoarding. There are $3,100,000,000 of cur- rency in the United States. Of this $1,800,000,000 is in banks and the United States Treasury. It is estimated that at the most one-half of the remainder, which is $1,300,000,000, is employed for every-day business. The six or seven hundred millions left is unaccounted for. This huge amount is in hiding. Moreover, the Treasury Department reports that this amount increased $300,- 000,000 during the recent panic. Such general massive facts as these are, indeed, decisive, but we have even more direct and specific proof. One of our postoffice in- spectors reports, among numerous other cases, that four families residing near a small postoffice in the State of Washington have $10,000 on deposit in the postal savings depository of British Columbia, right across the line. A postal savings depository in their own postoffice, offering absolute security and convenience, would keep the money at home. The latest report of the Postoffice Department shows that $100,000,000 is sent annually to Europe by distrustful foreigners in this country to be deposited in postal savings depositories there. The King of Italy 10 himself states that the larger part of the twenty-two mil- lions sent from America to Italy was deposited in Italian postal savings depositories. This fact illustrates the un- bounded confidence felt by this class in the Government, and the Government alone. Postmaster-General Meyer’s latest report illustrates forcibly the urgent demand for the security of postal savings deposits. It shows that in Nebraska, Oregon, Washington and Colorado, four States, $100,000 worth of money orders payable to pur- chasers remained uncalled for, the time limit being one year. This amount, mind you, does not include the far larger mumber payable to purchasers collected before the time limit. Mr. Meyer has published also in Senate Re- port 525 numerous letters from postmasters all over the country reporting the sale of large numbers of money orders payable to purchasers, and claiming that they had to refuse many people who wished to deposit money at postoffices for safe keeping. Mr. Meyer is by no means our only authority. Postmasters-General Maynard, Creswell, Wanamaker, Gary, James and Howe have each during their terms of office reported the repeated at- tempts of distrustful Americans and foreigners to use the postoffice for depositing money. According to the latest report of the Postoffice Department the number of money orders bought payable to purchasers in the United States during the last year amounted to over $8,104,447 on which fees of $25,000 were paid. These un- doubted facts mean that people were willing to pay large sums to have their money safe. Ladies and gentlemen, we might go on thus heaping one undeniable fact on another, all evidencing an existing state of affairs so serious and threatening as to cause two presidents and many distinguished legislators to propose this system of postal savings depositories as the solution of the problem; but these facts that we have mentioned are ample to demonstrate the pressing need for further savings facilities with absolute Government security. The system of postal savings depositories as provided for in the Carter Bill that we propose tonight 11 was framed for the express purpose of supplying this great dual need of our financial system. It strikes at the very root of the evil by giving to the people of our coun- try convenience of deposit, absolute security and confi- dence that their money is in a safe and sound place. Some- one has said that money is the blood of commerce, and that anything that tends to increase its circulation builds up and strengthens the commercial system. This money that we have spoken of as withdrawn and hoarded is dead capital which we should get into the channels of trade and commerce, and thus add to the welfare and prosperity of our country. In conclusion we have shown you by as many clean-cut facts as time permitted the crying need and imperious demand for the adoption of a system of postal savings depositories as contained in the Carter Bill; a system, ladies and gentlemen, that will be a step toward fulfilling our economic responsibility to the poor by offering to every individual in the remotest part of our country at opportunity to save; a system that will prevent hoard- ing and will welcome distrustful and timid depositors with a Government guarantee; a system that will give us a security foundation of rock for the fabric of our com- mercial, financial and banking structure; a system that, by the encouragement of thrift and frugality, and the strengthening of our financial activities, is bound to re- sult in a healthier economic growth, a higher social con- dition, a better citizenship, and the general upbuilding and success of our nation. 12 SPEECH OF NICHOLAS CALLAN IN THE TULANE-NORTH CAROLINA DEBATE. It is the aim of the argument that I present to estab- lish, first, that this country does not need postal savings banks; that our present system is already adequate, and, furthermore, that it is developing, and is certain to de- velop to meet the needs and demands of the people; secondly, that the evils and disadvantages of a postal system are such as to forbid its establishment. First, then, are postal banks really needed? We answer, No | There is no such need revealed when we analyze the conditions in the South and West and re- gard closely statistics of existing savings-bank facilities. These are the two parts of the country to be mainly con- sidered, for Mr. Carter and Mr. Meyer, the leading advo- cates of the system, admit that the North and East are already sufficiently supplied, and, if we can show that there is no pressing want of savings facilities in the South and West, and, furthermore, that our system is developing naturally, and contains ample guarantees of development, we shall have proved our point decisively. What, then, are the facts? According to the recent report of the Comptroller of the Currency for 1909, and the Committee of the Ameri- can Bankers’ Association, there are some 21,300 banking institutions in the United States, and about ninety per cent. of these banks receive savings deposits. Thus we have in the New England States one bank to every five thousand six hundred persons, in the Eastern States one bank to every seven thousand five hundred persons, in the Southern States one bank to every five thousand two hundred persons, in the Western States one bank to every two thousand five hundred persons, and in the Pacific States one bank to every four thousand people. Thus we see that, in proportion to the population, there are considerably more banks in the South and West than in the New England and Eastern States. Some ninety per 13 cent. of these institutions receive savings deposits, and the very fact that all do not indicates that the facilities offered run ahead of the needs of the country, for the banks, having use for every dollar they can possibly get, can solicit and receive savings without much additional expense. It cannot, then, be argued that, because the people of the South and those of the West do not save as do those of the New England and Eastern States, lack of facilities must be the cause. The South and West are just beginning their economic and financial development. In the South nearly half of the population is composed of negroes, who have not saved, and who are not likely to save under any conditions. But, aside from this, de- posits in savings banks are not the only form of sav- ings, nor the form most to be encouraged in newly-devel- oping sections. In the South and West developing re gions, but yet undeveloped, the people invest their sav- ings rather than deposit them in savings banks, and wise- ly, for from investment they receive high rates of interest, while the banks offer comparatively low rates, and by such investment, and not by deposits in savings banks, they are best furthering the development of their indus- trially-newer communities. º Very different, however, are the conditions in the New England and Eastern States, which, in a measure, have reached their full development. The early circumstances there were such as to demand savings facilities, and private enterprise responded to and met this demand. However, since banking is an inviting and profitable busi- mess, just as soon and wherever there are a need and a demand for banks, that need and demand will be met and supplied by private enterprise, precisely as in New Eng- land. That this is what is actually happening—that private enterprise is coming forward to meet the needs of the people—is conclusively shown by the marvelous growth 14 of banks in the South and West during the last few years. What are the figures to prove this? In nine years, less than a decade, according to the re- port of the Comptroller of the Currency, the number of banks increased in the Pacific States 152 per cent., in the Southern States 198 per cent., in the Western States 188 per cent, and in the New England States during the Same period there was a decrease of twenty-one banks. And all this marvelous increase in the number of banks in the South and West, we repeat, happened in less than one decade. These figures show vividly the quick response of supply to demand, and illustrates the power of the Americans to meet any situation by private energy and enterprise, without calling on the Government to help them, after the manner of the less self-reliant peoples of Europe. Certainly these figures of the growth of our banking system during the last nine years must be conclusive. But there is more to follow. From 1900 to 1908 the total individual deposits increased from $5,800,000,000 to $12, 700,000,000, over one-half of which is savings deposits, with a total of 16,000,000 depositors, or one depositor to every five persons. These figures demonstrate the adequacy and efficiency of our present banking institutions; but these qualities are still further shown most impressively by the fact that more money is deposited in the United States than in any other country, for, in the mutual and stock Sav- ings banks alone, or only seven per cent. of our institu- tions that receive savings deposits, there is over $3,500,- 000,000 on deposit, one-third of the savings of the entire world. Could these great results have been accomplished if the people viewed their existing banks with suspicion and mistrust? No. These massive figures bear unimpeach- able testimony to the well-nigh universal faith of Ameri- cans in the banking system of America, and they over- 15 shadow the fears of a few foreigners into utter insig- nificance. Not only is our banking system elastic and automati- cally self-adjusting to the wants of our people, but it is also safe and sound, and worthy of their trust and con- fidence. The supervision of banks has been constant and strict, for failures in this line of business have been less than in any other. Not only have failures among banks been comparatively few, but, even in the case of failed banks, the amount of money lost to depositors has been infinitesimally small. Furthermore, the accommodations offered by our pres- ent banking institutions are excellent, for we find banking hours and methods to meet the needs of every class. Ex- isting banks take every pains to cater to the working- man and the farmer. To enable the great mass of toilers to make deposits, they keep open one day in the week until 9 or 10 o'clock at night. They also offer the banking by mail, now made easy and convenient by rural free delivery. To all they cater by the Smallness of the sums they stand ready to receive, and by offering from three and one-half to four per cent. interest, nearly double the rate offered by the proposed postal banks. Thus far we have shown as our present system stands to-day that there is no serious and pressing need for postal banks. We have shown the remarkable development of our existing system within the last nine years, and, further still, we have shown its almost bound- less possibilities for future development. We have dem- onstrated the safety and efficiency of our existing insti- tutions, and, in view of these undeniable facts, we sub- mit that it is dangerous, extremely dangerous, to adopt a competing system that might prove detrimental to their growth. This brings me to the second vital point in my argu- ment—namely: That the evil and disadvantages of a postal system are such as to forbid its establishment. 16 First of all, our Postal Department is inefficient and incapable of conducting a system of postal banks. We should like to hear what our opponents have to say about the expense of a postal savings-bank system. The United States (while the postoffice departments of European na- tions are self-supporting) has a postoffice system with an annual deficit—a deficit last year of $16,900,000. Our postal system is badly organized and excessively extravagant. It pays more for transportation than all Europe combined, though it handles less matter and covers less mileage. Would it manage postal savings banks successfully? Could they be run without an excessive loss to the coun- try? We would like our opponents to reply. Ladies and gentlemen, not only is the Government’s desire to enter the banking business entirely unwar- ranted by the business situation, and an exceedingly doubtful financial venture, but the whole proposition—for the Government to solicit and guarantee funds to be re- deposited in certain designated pet banks—is alien to American institutions, and contrary to American charac- ter. The Carter Bill embodies a system not in accord with Our economic growth; its principles are not consonant with our traditions of government; its policy is born of a pernicious theory—the theory of paternalism, the theory that the power of civil government should be ex- ercised to regulate and control the private activities of its citizens. **. In a country like ours some sections are old in their economic development and some are still young, and there is a constant tendency on the part of the young to adopt such artificial means—to resort to the short cut of government aid rather than wait, as the older sections of our country wisely waited, for the more gradual, per- haps, but more efficient, natural development of private enterprise. With the Government’s desire to enter the banking business we witness what, for the United States, with its well-nigh universal suffrage, is an insidious and peculiarly dangerous entering wedge of paternalism. 17 Have we any guarantee that the millions of depositors in a postal savings system, influential by reason of their numbers and their votes, will be content with a two per cent. interest rate, when the private savings bank in the same place pays from three and one-half to four per cent. ? When may we not expect a demand from the mil- lions of depositing voters for an interest rate higher than that earned? And when might we not expect the further . forms of the paternalism and central government to fol- low in the train of postal savings banks? With the postal savings bank the Government would enter upon a path of paternalism and socialism to which Ino One can see any end. Tt is no proper function of the Government to play banker and broker, to receive de- posits and invest the people’s money. The Government should not become a rival of our private banking institu- tions. It should not, under the guise of protection, enter a field already occupied by private enterprise—private en- terprise that has promptly met and amply supplied the wants of the people with sound security, generous accom- modations and with high returns of deposits. We go much further, however. We maintain that the Carter Bill, with the postal savings banks, will do the greatest positive injury to the less-developed sections, which they are said to help, for they will seriously re- press the natural development of our pioneer districts. (a) The bill forbids the deposits of postal savings- bank funds in any but national banks, thus placing ac- commodations where they will do less to develop in the communities the least good, for national banks are ham- pered by law from lending on mortgage security, and mortgage loans are the only forms which most men in these regions can borrow. (b) Moreover, as my colleague will show, your na- tional banks are few in these less-developed sections, and, consequently, the funds are likely to be taken away from the vicinity where they are deposited. 18 (c) Again, at present banks follow the course of popu- lation, and are the potent means of accelerating the growth of new sections. Had we a system of postal savings banks many new towns, and towns springing up in the future, would have to wait years and years for modern banks and modern banking methods, for they would find the ground preoc- cupied and barred against them by the local postal bank. (Mr. Chairman, how much time have I?) º Ladies and Gentlemen: Not only is there no need for a postal savings bank, but the positive evils threatened by the Carter Bill call for its decisive rejection. 19 SPEECH OF ESMOND PHELPs IN THE TULANE-VIRGINIA DEBATE. We have pointed out the vast areas of our country that are almost totally unsupplied with savings facilities, and have shown what the establishment of a depository for savings in every one of the 40,000 money-order postoffices would mean to the people of these sections. We have also brought before you the fact that there are great numbers of persons in this country who are distrustful of private banks, and either actually pay to have their money held safe by investing it in money orders payable to bearer or hoard it in various hiding places in prefer ence to depositing it in a bank, although in a bank it would draw interest. It is my purpose to show what vast benefits postal savings depositories would confer on Our whole country by providing a radical remedy for both these evils. The present system is most discouraging to many who wish to save. To the average man saving is but a mo- mentary impulse, and the most favorable facilities should be offered in order that this impulse may become a per- manent habit. The easy introduction to the art of Sav- ing is a convenient and safe means of saving. The man who dwells in regions destitute of savings facilities has neither a convenient nor a safe opportunity for saving. The Government now proposes by postal depositories to give him. Both. The inhabitant of city or town may have the convenient means of saving, but he is far from always having a safe means of saving, and he is prone to exag- gerate manyfold his actual risk of loss. The failure of a single bank, even though the depositors eventually get paid in full, creates a feeling of distrust that cannot be removed in many years. To those subject to this dis- trust the postal depository affords perfect relief by affording perfect security. It would, therefore, engen- der in the people habits of saving, of thrift and of indus- try; it would increase the national wealth, and make our people both more prosperous and more contented. So much for its beneficial effect on the individual. 20 What, then, of the country at large? Postal depositories Would call into circulation vast sums of money that Would otherwise be hoarded or wasted either through lack of facilities for deposit or through distrust of the banks. Every dollar of this money would be a dollar gained, for we have already shown that it would be drawn from those who are either unable or unwilling to deposit under the present system. Moreover, every dol- lar of cash means four dollars of credit. As our system of financial credit depends upon its cash basis, such an addition to the cash of our country would mean a four- fold addition to our credit with which we would be able to finance many enterprises of the most vital importance to the development of our country, which now wait for lack of funds. But an even greater boon to be conferred by postal de- positories would be their beneficial effect in preventing and checking panics. For a hundred years our country has lacked banking facilities convenient, adequate and commanding universal confidence, and time and time again our finances have been embarrassed on account of the sudden withdrawal and hoarding of deposits by the suspicious. We have not yet recovered from the financial panic of a year and a half ago—a panic so serious as to force the suspension of payments in nearly every estab- lished bank throughout the United States; so serious as to destroy faith and confidence in our banking institu- tions, to paralyze and prostrate business activity and the industrial prosperity of the entire country. The anxiety and fear and injury worked by the panic of November, 1907, are too recent and too deeply impressed on our minds to require portrayal. For a time the banks sought to stem the tide of fear and distrust by paying freely the money demanded. But in vain. The cash so withdrawn instantly disappeared from circulation because the peo- ple felt that they had no place of security in which they could deposit it. According to the report of the Post- office Department during the panic of 1907 the number of money orders bought payable to purchasers increased 21 100 per cent. in five months. I have statistics here show- ing that the number of safety-deposit boxes rented dur- ing the recent panic exceeded all previous records. The banks in San Francisco and other large cities were forced to make agreements with Safety-deposit companies not to rent boxes in order to prevent large numbers of distrust- ful and suspicious people from hoarding cash in these boxes. Do not these facts show the need of positive gov- ernment security to keep this kind of money in circula- tion? The Treasury Department estimates that $300,000,000 fled into hiding during the panic of 1907, and this enor- mous shrinkage took place within a few weeks. Precisely at the moment when currency was most seriously needed, precisely then distrust and fear drew it from the channels of trade and commerce. Every dollar withdrawn meant a contraction of the cash basis by so much, and conse- quently a fourfold contraction of the superstructure of credit. The banks saw the futility of depleting their own reserves by payments to persons who hoarded the money and in no way used it to maintain the volume of credit. They were compelled in very self-defense to refuse to pay cash on demand. They were compelled to require a time notice before the withdrawal of deposits, or else to pay in clearing-house certificates, though such a course only served to engender suspicion and distrust at a time when the paramount need was confidence. Meanwhile the harm had been done. The banks had paid out a large part of their cash reserve, and were forced to refuse the renewal of loans to firms of the best financial standing because the cash basis had been so narrowed that it was essential that their credit business should be diminished and not extended. Thus, at the very time when business men most needed aid from the banks, the latter were forced to refuse it. Now what would be the effect of postal depositories in such a crisis? That they would entirely prevent financial stringencies we do not maintain for an instant. But we do say that postal depositories would always abate the 22 intensity of a panic and would sometimes prevent it en- tirely. Panics are often caused and always intensified by small depositors, who, at the slightest sign of alarm, gather in long lines before the windows of the bank and clamor for their money. Then they hoard it, for there is no place of absolute security where they may deposit it for safekeeping. Give them the postal depository and you supply this most needed place of absolute safety, for the guarantee of Uncle Sam secures the funds beyond the suspicion of even the most skeptical. The money withdrawn from the banks would be at once deposited in the postal depostories, and they in turn, according to the provision of the Carter Bill, would at once redeposit it in the nearest national bank. Thus the funds would be kept in circulation to meet the demands of the business- men of that community; the cash basis would not be sud- denly contracted; and opportunity would be afforded the banks.to gather their resources and weather the storm. Furthermore, the establishment of postal savings de- positories will not injure, but promote the development of banking as a private enterprise. If it be said that the existence of postal savings depositories will discourage the establishment of private banks in less-developed re- gions, we call your attention to the fact that postal de- positories will act as feeders to the new banks in that they will supply them with an amount of deposits already accumulated far in excess of the amount which the bank could hope to amass in many years without such aid. Moreover, since the depositories offer but two per cent., while the banks offer, on the average, three and seven- tenths per cent., it is clear that upon the establish- ment of a bank a large proportion of these deposits would be transferred to the bank. Of course, there would be a certain class who would be unwilling to trust a bank, but these people would not deposit in a bank, depository or no depository. The postal depository will bring these funds into circulation instead of allowing them to be hoarded. In addition, we must recall the fact, already emphasized, that depositories will educate the people 23 into the habit of Saving; and this alone. will be of great advantage to the new bank. And if it be argued that a certain class of depositors in existing banks would withdraw their money to deposit it in the government depository, we call your attention to the fact that by so doing they would knowingly sacrifice nearly one-half of the return on their money because of the lower rate of interest paid by the depository. The American saver needs no warning against such folly. The conclusion inevitably follows that the number of people who might thus withdraw their funds would be very small—for it must be remembered that the really distrustful do not now deposit in banks at all—and this Small class are the very ones that cause panics by with- drawing their money upon the slightest rumor. In conclusion, we have seen that our present financial- system has two serious defects—the lack of facilities for savings afforded to the people of large areas of our country and the absence of a place of deposit offering absolute security, which causes those distrustful of pri- vate banks to hoard—some of them at all times, and all at the least sign of a panic. Postal depositories would remedy both these defects, and would thereby render the inestimable service of increasing the amount of money constantly available for use, and, above all, of preventing that prolific source of panics, the sudden contraction of the cash basis. The proposed system, far from hurting the banks, will actually advantage both them and the community at large. The idea of postal savings depos- itories is no sudden visionary scheme of an idle dreamer. It is an approved feature of modern fiscal policy being operated with unvarying success in every considerable European country except Germany, where the municipal savings bank largely supplies its place; and, mark you, the United States itself already operates postal savings depositories in its own territories of Hawaii and the Philippines. It has been pondered over and thought out for thirty-five years by the best minds in both political 24 parties, intent upon cautiously adapting it to the genius of our institutions. g The most and the worst that those opposed to the sys- tem can urge against the bill in question resolves itself into a few formal criticisms, a few technical fault-find- ings of no general significance. Even if we should grant the full force of every one of these objections, they would be altogether of no importance. There are spots on the Sun, and no accomplishment of human legislation can ever be perfect. Why, even the Constitution of the United States, the noblest political instrument ever de- vised by the wit of man—even the Constitution has suf- fered many and grave amendments. What folly, then, because of a few trivial details, to reject a measure that would strengthen our banking system at the most dan- gerous points of proved weakness, that would turn the edge and break the force of financial crises, that would offer opportunity and incentive to thrift and saving, and that is full of the promise and potency of blessing, both to the individual and the nation. 25 SPEECH OF HERBERT W. KAISER IN THE TULANE-NoFTH CAROLINA DEBATE. Before advocating the establishment of postal savings banks in this country, it is incumbent upon the affirmative to show that our existing banking system, which means private enterprise under strict governmental supervision and regulation, not only will not develop to meet new needs, but also will remain seriously inadequate in the future. Upon this vital point our opponents have said little, and their silence is eloquent. The affirmative, on the contrary, having shown you by unimpeachable sta- tistics the marvelously rapid growth of banks in all sec- tions of this country, maintains that our present banking. system is not static, but is dynamic; that it is not stand- ing still, but is rushing forward to meet the needs of the people. My colleague has concerned himself with the principles and facts underlying this debate. I am going to confine my attention to an exact examination of the particular bill that is before us. We maintain that, even if the af- firmative, instead of failing, had succeeded in showing that existing savings facilities are inadequate, and that the American banking system is so static that it cannot develop to meet the needs of the people, it would still be incumbent upon them to show that we need just such a postal savings bank system as is outlined in the Carter Bill as ordered reprinted January 6, 1909. The Carter Bill is the essence of to-night's debate. This is fundamental. We emphasize the fact that we are not debating postal savings banks in general; we are not de- bating the Carter Bill with amendments or changes that subsequently may be found expedient and beneficial. The subject of this debate, as you may see on your pro- gramme, is one special form of the Carter Bill. The issue on this point is clean-cut and cannot be evad- ed. Now, we insist that if we can show you defects in the bill before us—defects that are deadly, that would sap the whole strength and efficiency of a postal savings bank 26 System—we have still more firmly established our posi- tion. We maintain that even if it were conceded, in- stead of disproved, that we need a system of postal sav- ings banks, the country is not going to financial ruin at So rapid a rate that we should adopt a system vitiated from the start by defects both obvious and dangerous. Patent blunders should not be canonized into law; they should be rectified before passage, and not after. Along with other defects in the Carter Bill, such as the Cumbersome bankbook system, which time does not per- mit us to dwell upon, this Carter Bill has at least two de- fects that are fatal. The first is found in Section 10, which provides that postal savings bank funds “shall be exempt from de- mand, garnishment, execution, attachment, seizure or detention under any legal process against the depositor thereof.” The opportunities for fraud, theft and dishon- esty offered by this provision are nothing else than ap- palling. Two illustrations will suffice: Suppose A steals $200 from B, and immediately puts it in a postal Savings bank. Under the exemption provision I have just cited, by no legal means known in law or equity can B recover that money which has been stolen from him, even though he knows and can prove that it is deposited in a postal savings bank. Another example: X is trus- tee of a small estate that is left to a minor, Y. From month to month X helps himself to the funds that have been intrusted to his care and puts them in a postal sav- ings bank. Let us suppose that X has a wife and three children, each over the age of ten years. X can put money in the postal savings bank in his own name and in the names of his wife and three children, until he has placed therein $5,000. Section 10 of the bill we are de- bating deprives Y, the minor, of using any legal process to get that money that has been embezzled from him, though he knows and can prove that it is in a postal sav- ings bank. Let your minds rest a moment upon what it would mean to have the Government in forty thousand 27 places offering itself as a trusty agent and protector in the perpetration of fraud, theft and dishonesty! Moroeover, regarding this same exemption clause, We would propose to the affirmative the following dilemma: If postal savings bank funds are not declared public moneys, and if this exemption clause be stricken out of the bill, then, in order to do justice to those whose funds have been stolen, in the transmission of inheritances, or successions as we call them in Louisiana, or otherwise, the Government must permit itself to be sued and drawn into litigation in the forty thousand domiciles of postal sav- ings banks, at the cost of countless complications, diffi- culties and expenses. But, if this exemption provision stands, then must the Government, as pointed out before, offer itself everywhere as a trusty accomplice in the per petration of fraud. The gentlemen from North Carolina must accept one or the other horn of this dilemma. Another fatal defect in the Carter Bill which we espe- cially call to your attention is the provision in Section 11 which explicitly provides that these postal savings- bank funds shall be redeposited only in national banks. We say that sound State banks, as well as national banks, ought to receive those funds. And, in order to show the evils of this provision in the bill before us, let us exam- ine it in the light of its application to the great State from which the gentlemen of the affirmative come. I have here the report of the Comptroller of Currency of the United States for 1908, showing that there are but sixty-nine national banks in the State of North Carolina. I also have here the report of the North Carolina Corpo- ration Commission for 1908, showing that there are 293 State banks in North Carolina, of which 208, or 70 per cent., have a capitalization of less than $25,000, the min- imum capitalization of a national bank. As a whole, the sixty-nine national banks of North Carolina, constituting 20 per cent. of the banks of the State, are confined to the larger cities and towns. On the other hand, the 293 State banks are distributed all over the State, and 208, or, roughly, three-quarters of them, are very small banks, 28 Smaller than the smallest possible national bank. Now, under the bill we are debating postal savings bank funds will be taken from the places where garnered together and redeposited in the nearest national bank, which is likely to be miles away from the place where the funds are gathered together. Though there may be a sound State bank in a small town which has no national bank, the postal Savings bank funds collected in that town will not remain there, but must be carried away to be redepos- ited in the nearest national bank, which may be five, twenty-five or a hundred miles away. Does that help the rural sections in which the negative is so interested? The bill we are debating deprives the State banks of North Carolina, constituting, roughly, 80 per cent. of the banks of that State and permeating every part of it, of the use of the postal savings bank funds, thereby immeasurably injuring the rural sections, the people of which are en- titled to have the use of their own money. The situation is exactly the same in Louisiana and in all except the older States. Ex-Postmaster General Meyer himself realizes the evils of this provision, and in testifying before Congres- sional Subcommittee No. 2 (see p. 33 of its report) he stated that sound banks should also be allowed to receive postal savings bank funds in order to build up the rural sections. Senator Carter himself, the author of the very bill under discussion, has discovered the error and in- justice of this provision in his bill, and last month he in- troduced into Congress an amendment—which amend- ment is not in the bill we are attacking to-night—permit- ting, sound State banks to receive postal savings bank funds. These are admissions against interest by persons who prepared and advocated the bill we are debating. Thus we may see that the two great high priests of this system have both openly repudiated a provision which the gentlemen from North Carolina must uncompromis- ingly advocate and defend. Such are the indictments we bring against the bill un- der debate. On them and on the arguments of my col- 29 league we may rest our cause. We believe that the de- fects I have cited to you are vital and condemn the bill finally. A proved serious defect in a measure should be remedied before enactment into law and not after. If, therefore, we have proved both or either of these defects to be serious, that proof alone is sufficient to establish the contention of the negative—that postal savings banks as outlined in the Carter Bill as ordered reprinted Janu ary 6, 1909, should not be established. Tet us sum up the situation as it stands at present. It is practically conceded that, north of the Ohio and east of the Mississippi Rivers, savings facilities are already adequate. We have shown you that even in the South and West they are adequate, when distribution of popu- lation and the nature of the industries are considered. We next pointed out to you that, even in remote localities, if savings facilities are less conspicuous, the obvious reason is founded in the law of supply and demand. In- habitants of remote and poorly-developed districts do not and should not save in the form of bank deposits, but should and do put every available dollar into new tools, plows, reapers, new acres of cleared land, and other equipment for increased production. Following on this thought, we next proved by statistics that banks have in- creased in these sections in the last nine years at the rate of 188 per cent. in the West and 198 per cent. in the South, and that, wherever there is a demand for a bank, private enterprise will soon establish one to meet the needs of such as desire to do both a savings and commer- cial business. Then, getting at the heart of the subject of our debate, we showed you that it is the Carter Bill, as ordered reprinted January 6, 1909, and that bill alone, that is the issue before us. With this position taken un- equivocally, we demonstrated to you two fatal defects in the bill: First, that the exemption provision puts the Government in the unenviable position of offering itself everywhere as an accomplice in the perpetration of fraud, theft and dishonesty, and that this provision con- tains a dilemma, in advocating either horn of which the 30 affirmative will advocate something that is detrimental to the best interests of this Government; and, Second; that, by the belated admissions of its own framers and spon- sors, the bill we are debating would harm even the rural sections themselves, because it does not allow sound State banks to receive postal savings bank funds, and would so deprive those sections of the use of their own money in their own upbuilding. We maintain that the presumption rests with the neg- ative; that, before the affirmative can justify such a pro- found modification in our fiscal policy and such a vital departure from our ideals and traditions of government, it is incumbent on them to show that our present bank- ing system not only is inadequate to-day, but also will be so in the future. Mutual savings, state and national banks, trust companies and loan and homestead associa- tions, all receive savings either under the passbook or certificate systems. The affirmative must show that this American banking system is static and rigid; that it con- tains elements that will not permit its developing on nat- ural lines to meet the needs of the people. The negative has not argued that the American bank- ing system is perfect. Of course, it is not. Nobody knows that better than the American banker and the ev- ery-day businessman. Legislation for the greater Se- curity of depositors, and for more thorough supervision and regulation of our financial institutions, should be and is being continually enacted. Let the United States Gov- ernment make its law as strict, rigid and exacting as it will concerning the control of all forms of corporate en- terprise, but let there be no twilight Zone between gov- ernmental control and regulation and governmental own- ership and operation. 31 REBUTTAL of CHARLEs E. DUNBAR, JR., IN THE TULANE- VIRGINIA DEBATE. Those opposed to the establishment of postal sav- ings depositories argue that private enterprise is de- veloping and will some day supply the need for savings facilities. Shall we wait for the slow and tedious process of development? Shall we wait until generations are born and dead, until private capital seeking solely private gain will see fit to establish a sufficient number of savings banks conveniently located to the people? It will take a century at least for the pop- ulation of the South and West to become as thick as in the New England States, and the population must become more dense before private banks can afford to enter. The time and need are now, and the remedy is here. Why wait for development when the postal savings depositor- ies will give to the scattered population of the South and West the needed facilities? Those opposed to postal savings depositories contend that the adoption of such a system would be paternalistic, and that “whatever can as well be done by private en- terprise as by the Government should never be entered upon by the latter.” If the adoption of postal sav- ings depositories is paternalistic, in the same sense our Postoffice Department is a paternal institution, and yet no one would advocate for an instant its control by private enterprise. In the same sense all government is more or less paternal, if they mean by paternal that it takes care of the interests of the people. Carrying the mails, excluding disease-infected vessels from the har- bors of trade and commerce, preserving the peace, pro- viding for public education, maintaining agricultural stations, are all paternalistic. We believe most firmly that “whatever can as well be done by private enterprise as by the Government should never be entered upon by the latter,” but private enterprise is not supplying the need and cannot provide the confidence necessary to a sound financial system, as we have shown; therefore, the 32 Government should step in and supply the need. Postal savings depositories do not savor of paternalism be- cause they do not propose any addition to our present governmental system. They only propose to adapt a branch of that system, the Postoffice Department, to the use of the people along lines in perfect harmony with the uses to which that department is already devoted. It cannot be urged that people in the thinly-populated sections of the South and West should and would desire to invest their money, and, therefore, do not need further savings facilities, for postal savings depositories prevent no man from saving. Postal savings depositories are not intended for the man with money to invest. Postal savings depositories are intended for those who save by cents and not by dollars, and these have no opportunity for investment until they have so saved. As for farm hands, laborers, hired men, clerks and others, how can they do anything until they have saved sufficient money to invest? Postal savings depositories will give them the opportunity to save, and so ultimately to invest. They can thus soon become small landowners. Postal savings depositories, by encouraging thrift and frugality in these sections, would mean a more perfect and speedy develop- ment of the resources of the country. Postal savings depositories would not prevent private banks from entering pioneer sections, but would educate the people to saving and make the field more desirable for private enterprise. Postal savings depositories would cater to a different class of people, and would compete in no way with pri- vate institutions. Again, postal savings depositories have none of the functions of the regular bank. They do not loan money, deposits are limited, no pay- ments are made on checks, exchange is neither bought nor sold, no banking functions are performed. It cannot be urged, therefore, that there would be competition, when, as we have shown, they cater to different classes of peo- ple and perform entirely different functions. Again, postal savings depositories would not compete 33 with private enterprise in pioneer sections of the country, for the fact that the higher interest rate offered by the private banks would divert the money of intelligent de- positors from postal savings depositories to the private banks. If the newly-established bank is a savings bank, those people who persist in keeping their savings in pos- tal savings depositories, in spite of the Superior inter- est rates offered by the private banks, are the distrust- ful element that hoard their money, and they never would have deposited their savings in a private bank. As for the newly-established commercial bank, as we have said before, businessmen desiring to do a banking business would be compelled to patronize the private commercial banks, and the demand of businessmen would call them into the community. Besides, businessmen could not use the postal savings depositories if they wanted to, even if their sole object was safe deposit, because the postal sav- ings depositories receive only limited deposits. 34 REBUTTAL OF NICHOLAS CALLAN IN THE TULANE-NoFTH CAROLINA DEBATE. Our opponents have based their contention as to the need and necessity for postal banks on the supposed fact that the New England and Eastern States have over forty per cent. of our existing banking institutions that receive savings deposits. This statement is based on the erroneous and misleading figures advanced by Postmas- ter-General Meyer, who rests his contentions on the mu- tual and stock savings banks, of which there are some 1,400, concluding that these are the only banks offering savings facilities, whereas as a matter of fact we have shown that there are 21,000 banking institutions in the United States, ninety per cent. of which receive sav- ings deposits, and, furthermore, we have shown that in the South and West there are more banks in proportion to the population than in the New England and Eastern States. Our op- ponents’ contention as to the comparative distance of the people from the banks in the different sections of the country rests on the same fallacy—namely, that in reck- oning this distance only mutual and stock savings banks were taken into consideration. However, even in the most undeveloped sections of the South and West we have shown that banking is done, and can be done, con- veniently and profitably by mail. Our opponents have told us of the great number of postal money orders bought payable to self, amounting to $8,000,000, but they neglect to tell us whether this money was collected at the same place at which the money order was bought. There is a high probability that the majority of these orders were purchased by traveling- men, actors, drummers, and so on, as a cheap and con- venient means of carrying money from one place to another, so we see that it is not as a savings bank that these buyers use the postoffice, but as a medium of ex- change. The affirmative, too, have brought out the fact that large sums of money are sent to Europe and redeposited 35 there, but they ſail to show whether it was to the credit of the sender—indeed, they fail to show how much was redeposited at all. Of course, our immigrants send money to Europe to assist their relatives at home or to bring them over here, and if the money is redeposited in European postal banks it is nine times out of ten to the credit of the receiver. This money remitted abroad would be so remitted, postal banks or no postal banks. Furthermore, the foreigner does not distrust private banks because they are private, for he deposits in the worst kind of private institutions if the cashier happens to speak his language. His inability to speak English, but not the fear of private banks, is the main reason that keeps him from depositing in American banks, and postal banks will in no way remedy this. We are told that postal banks will encourage habits of thrift and frugality, but postal banks will hardly change a man’s nature—they will not make the thriftless thrifty, nor the spendthrift save. The most they can do is lu offer an opportunity to save, and that opportunity we have already shown is offered by our present institutions with superior inducements, sound security and high re- turns on deposits. Any argument our opponents base upon European precedence rests upon a most insecure foundation, for the history, the traditions, the ideals, on the two shores of the Atlantic are too widely diverse to allow any reason- ing by analogy. Our economic, political and social condi- tions are essentially different from those of Europe. Specifically, the main consideration that prompted the adoption there was the pressing need and serious want for further savings facilities such as do not exist in this country. Take the most self-reliant people of all Europe for instance—the English. In England, according to statistics in Senate Report 525, there were only 638 savings banks, and 350 of these were open only a few hours a day. Twenty-four towns with more than 10,000 inhabitants, and fourteen counties, were with- out savings facilities at all. We have banks in towns of 36 500 inhabitants. If conditions existed here as they did in England prior to the establishment of the postal bank, if private enterprise did not respond to meet the needs and wants of the people, if the South and West were not developing financially, the Government might be justified in entering the banking business. Should we, anyway, ladies and gentlemen, adopt a sys- tem that might seriously interfere with the great growth of our already existing banks? Should we adopt a sys- tem that furnishes a harbor for the thief and forger? Should we adopt a system that will dwarf and retard the development of our pioneer sections just to cater to the fears of a handful of ignorant people. To shape our bank- ing system to suit the whims of a few timid aliens would be the height of absurdity. 37 REBUTTAL OF ESMOND PHELPs IN THE TULANE-VIRGINIA DEBATE. The opponents of the Carter Bill point with horror to the provision that exempts postal deposits from legal process, and urge that it affords a vast opportunity for fraud and theft. We frankly admit that injustice may be worked in a few specific instances, but we submit that the cases in which hardship would be caused would be few and far between, and that the advantages and need of such a provision more than counterbalance its slight disadvantages. When we consider whether a law be good or bad we must view its general effect and not a few iso- lated cases. The very best rule of law at times works individual hardship and injustice. The evil effects of this provision are reduced to the lowest minimum because: (a) Under the Carter Bill no individual can have more than one account. No account can exceed $1,000; and not more than $200 can be deposited in any one month. It follows from this that none but the smallest frauds and thefts could be perpetrated, for the fraud or theft would be likely to be discovered within the month. (b) This provision in no way impedes the enforce- ment of the criminal laws against those who seek to com- mit frauds or thefts. The heavy hand of the law would still exact the rigorous penalty for their misdeeds. The idea that a man would be willing to go to the peniten- tiary merely for the privilege of having from $200 to $1,000 in a postal depository is too absurd to be dis- cussed. Moreover, the effect of this provision will be no other than that of the numerous exemption statutes which exist in every State. The Courts have held unani- mously that exempt property purchased by a thief cannot be seized by the man who has been robbed unless he can prove that this property has been bought with the spe- cific stolen funds, and such proof is practically impossible, for the very nature of money prevents it from being traced. When a thief has once converted the stolen 38 goods into money he may deposit it in various banks in various assumed names, and it is impossible ever to dis- cover where it is. (c) The necessity of this provision is seen when We consider that were it not in the bill the Government would constantly be haled into court and involved in litigation, and would thus be subjected to great inconvenience and expense. To be consistent in their objections, the op- ponents of the bill must favor involving the National Government in constant litigation in 40,000 different localities, and must oppose the universal principle of ex- emption statutes. The opposition to the provision of the bill that gives postal deposits a prior lien on the assets of the bank on the ground that it will cause fear in the national-bank depositors for the safety of their funds is totally un- founded. According to the report of the Comptroller of the Currency for 1908, the average loss of national-bank deposits for the past forty years has been but six One- hundredth of one per cent. The national-bank deposi- tors are a wealthy and intelligent class—far removed from that class of suspicious small depositors whose dis- trust always starts and accentuates panics—and would not fear because the chances of losing their money would be seven or eight out of ten thousand, instead of six. Ob- viously this provision is adequate to protect the Govern- ment, for in order that the Government should ever suffer a loss the total assets of the failed bank and the stockholders’ double liability would together have to be insufficient to cover the Government deposits. This pro- vision is the only one possible that can at the same time give the postal depositor absolute safety, relieve Uncle Sam from any danger of loss, and render it certain that banks will be found ready to take all the pos- tal deposits and pay at least two per cent. interest thereon. If, as some propose, a bank was required to de- posit with the Secretary of the Treasury as security United States bonds sufficient to cover the amount of postal deposits in that bank, it is evident that the margin 39 of profit to the bank on such postal deposits would be re- duced to nothing—may, even reduced to a loss—because the bank would have to pay, in addition to the two per cent. interest to the Government, the difference between six per cent., or thereabouts, the lending value of its money invested in the bonds, and about three per cent., the income gained from the bonds. This would make the bank pay about five per cent. for the privilege of having postal deposits, and it is certain that but few would be willing to do this. The provision that the postal deposits shall be depos- ited in the nearest national bank is made with the ex- press purpose of keeping the money in the same locality, and helping the upbuilding of that community. Were it provided that the bank that bid highest should get all the funds, the money would soon be amassed in a few large centers, and the savings of the people would not con- tribute to the prosperity of their county or town. There is no other system that can fill the need of postal Savings depositories. The Government guarantee of bank deposits is not only open to fatal objections which cannot be urged against the postal savings depositories, but also it would not extend the facilities of saving to a single person who does not enjoy them now. Government guarantee of bank deposits would not insure the estab- lishment of a single additional institution to receive savings. 40 REBUTTAL OF HERBERT W. KAISER IN THE TULANE-NoRTH CAROLINA DEBATE. The gentlemen from North Carolina are evading the issue. They say that the subject of to-night's debate is not the Carter Bill, as ordered reprinted January 6, 1909, but that our subject is postal savings banks. We submit that a reading of the question effectively answers the gentlemen of the affirmative. As you may see from your programme, we are not debating postal savings banks in general, but we are debating a certain particu- lar form of postal savings banks—that form which is embodied in the Carter Bill, as ordered reprinted Jan- uary 6, 1909. We contend that, even if it be conceded, instead of disproved, we need a system of postal savings banks, there is no pressing necessity for adopting a measure which, on its very face, is defective and harm- ful. With full knowledge of the dangers to be avoided, it is just as easy to draw a good bill as to draw a bad OIlé. In reply to the indictment we have brought against the garnishment exemption provision, the gentlemen of the affirmative reluctantly admit the evil consequences that we claim will follow from such a provisions, but they say that such a clause must be in any postal savings bank bill. For argument’s sake, granting that that is true, their position is unique in that they ask for the institution of a system which they confess cannot be made to avoid placing our Government in the position of offering itself in the forty thousand domiciles of the postal savings banks as a trusty agent and accomplice in the perpetra- tion of fraud and dishonesty. The gentlemen from North Carolina condemn their own measure. We submit that even if a man be hungry he should not eat a rotten apple, because parts of the apple are good, when a sound orange is equally at his disposal. We have attacked the provision in the bill before us that limits the redeposits of postal savings bank funds to national banks. The affirmative has not touched upon 41 this point. We analytically showed you what harmful re- sults would follow the passing of a bill containing such a provision, and the gentlemen of the affirmative have re- mained silent. We cited you the application of this pro- vision in the bill to the State of North Carolina. Can it be that the gentlemen of the affirmative are ignorant of conditions in the State from which they hail? However, to bring this point before you in the most concise manner, let me but cite you the application of this provision to the town of Donaldsonville, in this State. Donaldsonville, with a population of over five thousand, has three sound State banks, with deposits aggregating over a million dollars. This town has no national bank. Under the bill before us, moneys deposited in the postal savings bank at Donaldsonville could not be redeposited in the sound state banks in that town, but would have to be carried to the nearest national bank, either at Baton Rouge, about thirty miles cross-country, or to New Or- leans, over sixty miles away. Would that help Donald- sonville and the rural sections around that town, in the interest of which the negatives seem so solicitous? Sound state banks, as well as national banks, should receive postal savings-bank deposits in order to be of value to the rural sections. The bill before us prevents this. If we must have postal savings banks, then the bill that establishes this system must allow Sound state banks, as well as national banks, to receive the redeposits. We have challenged the negative to show that our ex- isting banking system not only will not develop to meet new needs, but also will remain seriously inadequate in the future. In the light of their admission that savings facilities are to-day adequate north of the Ohio and east of the Mississippi Rivers, and their inability to refute our statistics showing that, in the past nine years, less than a decade, banks have increased in the West at the rate of 188 per cent., and in the South at the rate of 198 per cent., we can readily understand their silence on this essential phase of our subject. The good old economic 42 law of supply and demand exists in the banking business as well as in other businesses. In resting our cause, we can but reiterate that we claim no perfection for the American banking system, in spite of the fact that, under that system—which is a system of private enterprise under strict governmental control—we have grown to be the greatest power on the face of the earth ! We maintain that the American busi- nessmen—for our businessmen are our bankers—are keen, farsighted and energetic in their efforts for the in- dustrial progress of this country. There is no field of pri- vate enterprise in the land wherein there are greater facilities accompanied by security than the field of bank- ing. We believe that the American banking system is not standing still; that it is expanding at least with, and probably ahead of, the needs of the people. In the light of our economic history and traditions of government, we earnestly submit that the line of demarcation between private enterprise under strict governmental control and supervision and public ownership and operation must be distinct and permanent. This is a fundamental concep- tion in the American theory of government. 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