An Act of Congress of June 25, 1910, established the Postal Savings System in designated Post Offices.
The legislation aimed to get money out of hiding, attract the savings of immigrants accustomed to saving at Post Offices in their native countries, provide safe depositories for people who had lost confidence in banks, and furnish more convenient depositories for working people.
The system paid two percent interest per year. Initially, the minimum deposit was $1, and the balance in an account could not exceed $500, excluding interest.Deposits were slow at first, but by 1929, $153 million was on deposit. Savings spurted to $1.2 billion during the 1930s and jumped again during World War II, peaking in 1947 at almost $3.4 billion.
On April 27, 1966, the Post Office Department stopped accepting deposits to existing accounts, refused to open new accounts, and cut off interest payments as the annual anniversary date of existing accounts came up. When the system ended officially July 1, 1967, about $50 million in the unclaimed deposits of more than 600,000 depositors was turned over to the U.S. Treasury Department to be held in trust indefinitely.
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