Banking Services Return to the Post Office

By MARK ANDERSON

Leave it to the private-banking-friendly mass media to mischaracterize the necessary return of banking services provided via the US Postal Service (USPS) By casting this matter largely as a divisive left-right issue, the media help diminish the likelihood that those in lower income brackets could utilize what could become a sound public alternative to the usurious commercial banking system.

Back on Oct. 4, 2021 the Washington Post noted:

“Postal banking has become a Democratic hobby horse in recent years, with activists and politicians saying it solves two problems: the Postal Service’s precarious financial condition and the barriers many U.S. households face to building wealth and accessing their money. For the nation’s 14.1 million unbanked and underbanked adults, the plan presents a government-backed alternative to paycheck cashing stores and payday lenders, which target vulnerable populations with outsized fees and interest rates …”

The Post also noted at the time that “even postal advocates express some skepticism the [USPS] has the bandwidth for such an expansive line of business,” due to steep upfront costs etc. The conservative Lexington Institute’s Paul Steidler added: “The Postal Service processes and delivers billions of pieces of mail and packages. It is not a financial services firm.”

All that aside, the USPS began a postal banking pilot phase on Sept. 13, 2021 in collaboration with the American Postal Workers Union. Paycheck-cashing services were discussed during collective bargaining negotiations. With minimal fanfare, the USPS soon began offering paycheck-cashing services. Bill-paying services and ATMs have been considered.

However, as the Post’s article failed to outline, actual postal savings banks, which did more than check-cashing services, were a reality even before the Great Depression. The US operated postal savings banks in Post Offices from 1911 until their abolition in 1967. And as recently as July 2011, the National Association of Letter Carriers at its national convention adopted a resolution that saw postal banks as a possible means of rescuing the ailing USPS. That resolution noted, as is being said now, that postal banks could be a new revenue source to save the postal system and give the public another banking option.

Money into treasury

Lo and behold, there is a formal Campaign for Postal Banking (CPB) based in Washington D.C., whose website takes note of what critics allege:

“Opponents [believe] that a Postal Savings System would threaten private banks, that banking should be a private, not public, function, and that depositing the savings in the US Treasury would centralize power in Washington.

“But the real centralization of power to worry about is the private central banking system, as represented by the Federal Reserve in the US and ultimately, the Bank for International Settlements in Switzerland. Private banks want both banking and money creation to be privatized, when, actually, at least money creation should be a completely public thing. Might the USPS prove the case for public banking as well? Perhaps so.”

It was under President Theodore Roosevelt in 1907 that the idea of establishing a postal banking system first seriously emerged but Congress did not act. President William Howard Taft’s platform in the 1908 election argued for such a system. And Congress finally acted in 1910, establishing the US “Postal Savings System.”

“The legislation was intended to achieve several related purposes: first, to provide a safe place for working class families to invest funds; second, to encourage deposits by individuals who were afraid of using private banks due to repeated banking panics; third, to increase the supply of currency by encouraging people to take savings that were ‘hidden in mattresses’ and put these funds into circulation through … deposits; and fourth, to make bank services [nearby and] available to working people,” Raymond Natter of the Ultimate History Project wrote.

The full-fledged return of a postal banking system not only could help small business owners and individuals who were financially marooned by COVID restrictions; it could also be a solid hedge against the contemplated replacement of cash with a very “iffy” digital currency system that likely would dramatically increase surveillance of our transactions and further centralize financial controls under “Central Bank Digital Currency” proposals revealed during a recent Brookings Institution program.

Mark Anderson is a veteran journalist who divides his time between Texas and Michigan. Email him at truthhound2@yahoo.com.

From The Progressive Populist, March 15, 2023

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