An Empirical History of the United States Postal Savings System

Abstract

Seeking to reach the unbanked, the United States Postal Savings System provided a federally insured savings alternative to traditional banks. Using novel datasets on postal deposits, demographic characteristics, and banks, we study how and by whom the System was used. We find the program was initially used by non-farming immigrant populations for short-term saving, then as a safe haven during the Great Depression, and finally as long-term investment for the wealthy during the 1940s. However, even during the earliest period, Postal Savings was only a partial substitute for traditional banks, as locations with banks often heavily used postal savings.

Keywords: Postal Savings Banks, Commercial Banking, Savings, Bank Competition, Unbanked, under-banked

JEL Classification: N22, G21, H42