“Ethical Markets also supports the U.S.Postal Service (USPS) and restoring its role as a savings bank as in so many other countries. Lawyer Ellen Brown, explores the history in the USA of politicians and bankers’ efforts to privatize the USPS and by burdening it with unfair legislation. We are proud that Ellen Brown, also author of “The Web of Debt” and “The Public Bank Solution” also serves on our Advisory Board.
~Hazel Henderson, Editor”
The US Postal Service, under attack from a manufactured crisis designed to force its privatization, needs a new source of funding to survive. Postal banking could fill that need.
The US banking establishment has been at war with the post office since at least 1910, when the Postal Savings Bank Act established a public savings alternative to a private banking system that had crashed the economy in the Bank Panic of 1907. The American Bankers Association was quick to respond, forming a Special Committee on Postal Savings Legislation to block any extension of the new service. According to a September 2017 article in The Journal of Social History titled “‘Banks of the People’: The Life and Death of the U.S. Postal Savings System,” the banking fraternity would maintain its enmity toward the government savings bank for the next 50 years.
As far back as the late 19th century, support for postal savings had united a nationwide coalition of workers and farmers who believed that government policy should prioritize their welfare over private business interests. Advocates noted that most of the civilized nations of the world maintained postal savings banks, providing depositors with a safe haven against repeated financial panics and bank failures. Today, postal banks that are wholly or majority owned by the government are still run successfully not just in developing countries but in France, Switzerland, Israel, Korea, India, New Zealand, Japan, China, and other industrialized nations.
The US Postal Savings System came into its own during the banking crisis of the early 1930s, when it became the national alternative to a private banking system that people could not trust. Demands increased to expand its services to include affordable loans. Alarmed bankers called it the “Postal Savings Menace” and warned that it could result in the destruction of the entire private banking system.
But rather than expanding the Postal Savings System, the response of President Franklin Roosevelt was to buttress the private banking system with public guarantees, including FDIC deposit insurance. That put private banks in the enviable position of being able to keep their profits while their losses were covered by the government. Deposit insurance along with a statutory cap on the interest paid on postal savings caused postal banking to lose its edge. In 1957, under President Eisenhower, the head of the government bureau responsible for the Postal Savings System called for its abolition, arguing that “it is desirable that the government withdraw from competitive private business at every point.” Legislation to liquidate the Postal Savings System was finally passed in 1966. One influential right-wing commentator, celebrating an ideological victory, said, “It is even conceivable that we might transfer post offices to private hands altogether.”
Targeted for Takedown
The push for privatization of the US Postal Service has continued to the present. The USPS is the nation’s second largest civilian employer after WalMart and has been successfully self-funded without taxpayer support throughout its long history; but it is currently struggling to stay afloat. This is not, as sometimes asserted, because it has been made obsolete by the Internet. In fact the post office has gotten more business from Internet orders than it has lost to electronic email. What has pushed the USPS into insolvency is an oppressive congressional mandate that was included almost as a footnote in the Postal Accountability and Enhancement Act of 2006 (PAEA), which requires the USPS to prefund healthcare for its workers 75 years into the future. No other entity, public or private, has the burden of funding multiple generations of employees yet unborn. The pre-funding mandate is so blatantly unreasonable as to raise suspicions that the nation’s largest publicly-owned industry has been intentionally targeted for takedown.