Monday, February 9, 2009

The good old bank of the USPS

Q: Has the U.S. Postal Service ever offered savings accounts to the public like in other countries?

A: Yes — but it ended those operations in 1966.

Many countries have indeed operated savings-oriented banks through their postal services, and many such operations still are in business. Up until a few years ago, the bank operated by Japan’s postal service held $2.9 trillion — about a third of that country’s personal savings. That bank was privatized last year.

The U.S. Postal Service operated its Postal Savings System between 1911 and 1966. At its peak, in 1947, it had more than 4 million accounts. Many belonged to immigrants, who had used similar savings systems in their native countries.

But the U.S. system eventually lost business to commercial banks, which offered more services and better interest rates. By the time the system was discontinued, it had fewer than 1 million accounts.

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