Beautifully printed $500 certificate #2272 from the Postal Savings System
dated July 3, 1944. This historic document (Series of 1939) has an
ornate border around it with a vignette of the American Government Seal. It was issued under the Act of June 25, 1910 out of the Chicago, Illinois office. This certificate has the printed signature of the Postmaster General.
The United States Postal Savings System was a postal savings system operated by the United States Postal Service from January 1, 1911 until July 1, 1967. The system paid depositors 2 percent annual interest. Depositors in the system were initially limited to hold a balance of $500, but this was raised to $1,000 in 1916 and to $2,500 in 1918. At its peak in 1947, the system held almost $3.4 billion in deposits. The system originally had a natural advantage over deposit-taking private banks because the deposits were always backed by "the full faith and credit of the United States Government." However, because the Federal Deposit Insurance Corporation gave the same guarantee to depositors in private banks, the Postal Savings System lost its natural advantage in trust.
Postal Savings System
An Act of Congress of June 25, 1910, established the Postal
Savings System in designated Post Offices, effective January 1,
1911. 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. Although bankers first viewed
the Postal Savings System as competition, they later were
convinced that the Postal Savings System brought a
considerable amount of money out of hiding from mattresses
and cookie jars.
The law establishing the Postal Savings System directed the
Post Office Department to redeposit most of the money in the
system in local banks, where it earned 2.5 percent interest. The
Postal Savings System paid 2 percent interest per year on
deposits. The half percent difference in interest was intended to
pay for the operation of the system.
Certificates were issued to depositors as proof of their deposit
in the Postal Savings System. Interest was compounded
annually on all certificates issued on or after September 1, 1954, although simple interest continued to be
paid on certificates issued before that date. The initial maximum allowable balance of $500 was raised to
$1,000 in 1916 and to $2,500 in 1918. The initial minimum deposit was one dollar. In order to save
smaller amounts for deposit, customers could purchase a 10-cent postal savings card and 10-cent postal
savings stamps to fill it. The card could be used to open or add to an account when its value, together
with any attached stamps, amounted to one or more dollars, or it could be redeemed for cash.
Initially certificates of deposit were issued in denominations of $1, $2, $5, $10, $20, $50, and $100. Until
May 1916, there was a monthly deposit cap of $100. Beginning in July 1917, certificates were also
issued in the amounts of $200 and $500. Beginning September 1, 1954, when new punch card-style
certificates were issued, $1,000 and $2,500 denominations were added, and the $2 denomination was
dropped. The $1 denomination was dropped in August 1956, when the minimum deposit was raised to
From July 1, 1911, to July 1, 1935, Postal Savings System deposits could be exchanged in amounts of
$20 or more for postal savings bonds, which yielded 2.5 percent interest. After July 1, 1935, customers
could purchase U.S. savings bonds in lieu of postal savings bonds.
Beginning in 1940, postal savings stamps were also issued in 25-cent, 50-cent, and 1-dollar
denominations. In 1941, a 5-dollar denomination was added, and while still redeemable for certificates of
deposit, the stamps were meant to be pasted into booklets which were redeemable for United States
Treasury Defense savings bonds.
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, with more
than four million depositors using 8,141 postal units. The large increase during the war was attributed to
the shortage of goods for purchase, the drop in bank interest rates to one percent or less, and the
convenience offered by familiar Post Offices to people working long hours and displaced from their
Postal Savings System certificate of deposit, 1954 series
After World War II, goods became available to meet pent-up consumer demand, banks raised their
interest rates to two percent or higher and offered the same government guarantee as the Postal Savings
System, and savings bonds provided a higher rate of interest. Deposits in the Postal Savings System
declined, dropping to $416 million by 1964.
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 yearly anniversary date of existing accounts
came up. When the Postal Savings System ended officially on July 1, 1967, about $50 million in
unclaimed deposits of more than 600,000 depositors was turned over to the Treasury Department to be
held in trust indefinitely. Under an agreement between the Treasury Department and the Post Office
Department, postmasters continued to service accounts by maintaining account records, accepting
applications for payment, and certifying them to the Treasury for direct payment to depositors.
Postmasters began closing accounts in September 1968, and by June 1969 all account records had been
sent to the Treasury Department.
An Act of August 13, 1971, authorized the Treasury to turn over the money on deposit to various states
and jurisdictions, each sharing proportionally based on its own deposits. Some $9 million were
distributed that year. Some money was kept on deposit for future claims, but under the Postal Savings
System Statute of Limitations Act of July 13, 1984 (Public Law 98-359), no claims could be brought more
than one year from the date of the enactment. Thus, no claims made after July 13, 1985, have been
The above statute of limitations applies only to certificates. Postal savings stamps and postal savings
bonds can be redeemed by sending them to the Bureau of the Public Debt, Post Office Box 426,
Parkersburg, WV 26106-0426.
UNITED STATES POSTAL SERVICE
For more information about buying and selling Postal Savings Certificates
please see United
States Postal Savings System