United States. Post Office Dept. Postal Savings Sy.

Regulations governing the deposit of postal savings funds in banks : and the acceptance of bonds as security therefor online

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GIFT OF




•lonn PS 2. (August, 1916.)



BOARD OF TRUSTEES



REGULATIONS

GOVERNING THE DEPOSIT

OF POSTAL SAVINGS FUNDS

IN BANKS

AND THE ACCEPTANCE OF BONDS
AS SECURITY THEREFOR



ISSUED BY THE BOARD OF TRUSTEES
UNDER AUTHORITY OF ACTS OF CONGRESS



EDITION OF AUGUST, 1916




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WASHINGTON

GOVERNMENT PRINTING OFHCE

1916



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Form PS 2. (August, 1916.)



BOARD OF TRUSTEES



REGULATIONS

GOVERNING THE DEPOSIT

OF POSTAL SAVINGS FUNDS

IN BANKS

AND THE ACCEPTANCE OF BONDS
AS SECURITY THEREFOR



ISSUED BY THE BOARD OF TRUSTEES
UNDER AUTHORITY OF ACTS OF CONGRESS



EDITION OF AUGUST, 1916



" -A Cfc»t,




WASHINGTON
GOVERNMENT PRINTING OFHCE

1916









Postal Savings System,
Office of the Board of Trustees,

^\asllmg^on, T). C, August 16, 1916.
At a meeting of the Board of Trustees of the Postal Savings System
held August 16, 1916, the foUowing resolution was adopted:

''Resolved, That under authority of the act of Congress approved
June 25, 1910, and the several amendments thereto, the Board of
Trustees hereby approves and promulgates the accompanying revision
of the regulations governing the deposit of postal savings funds in
banks, and the acceptance of bonds as security therefor, to take
effect immediately and to supersede all previous editions and all
regulations and rulings in conflict therewith."

A. S. Burleson, Postmaster General.

W. G. McAdoo, Secretary of the Treasury.

T. W. Gregory, Attorney General.

Board of Trustees, Postal Savings System.
Attest :

A. M. DOCKERY,

Third Assistant Postmaster General,

Secretary of tlie Board of Trustees.



POSTAL SAVINGS SYSTEM.



REGULATIONS GOVERNING THE DEPOSIT OF POSTAL SAVINGS FUNDS IN
BANKS AND THE ACCEPTANCE OF BONDS AS SECURITY THEREFOR.

ISSUED BY THE BOARD OF TRUSTEES UNDER AUTHORIH OF ACTS OF CONGRESS.



Sectiox 1. The administration of the Postal Savings System is by
law divided iijto two parts. Tlic Postmaster General is charged with
the designation of post offices as postal savings depositories, the super-
vision of postal savings business transacted at depository post offices,
and the conduct of the central administrative office at Washington.
The Board of Trustees, consisting of the Postmaster General, the
Secretary of the Treasury, and the Attorney General, is charged with
the management and investment of postal savings funds after they
leave the custody of postmasters. (Act of June 25, 1910, sec. 1, as
amended by the act of Aug. 24, 1912.) The Treasurer of the United
States is treasurer of the Board of Trustees. (Act of May 18, 1916,
sec. 2.)

Sec. 2. The Third Assistant Postmaster General is hereby consti-
tuted the agent of the Board of Trustees for all purposes connected
with the c{ualification of depository banks, the fixing of the amounts
of securities to be deposited and withdrawn by such banks and the
conditions of such deposits and withdrawals, the deposit of postal
savings funds to the credit of said board and the withdrawal and
transfer of such funds, the authorization of the sale of securities of
banks which fail or decline to repay deposits on demand, the purchase
of postal savings bonds for depositors, and the repurchase of such
bonds for the purpose of maintaining their parity.

2. In the event of the absence or inability to serve of the Third
Assistant Postmaster General, the chief clerk to the Third Assistant
Postmaster General is authorized to act as the agent of the Board of
Trustees, for the purposes stated, in conformity to section 178, Revised
Statutes.

3. All correspondence and reports intended for the Board of
Ti'ustees shall be addressed to the Third Assistant'Postmaster General,
Division of Postal Savings, Washington, D. C.



345845



POSTAL SAVINGS SYSTEM.



ELIGIBILITY OF BANKS.



Sec. 3. The. act of May 18^ 1916 (amending sec. 9 of the act of
June 25, 1910), prescribes that the funds received at postal savings
depository offices in each city, town, village, or other locality shall be
deposited, in the order of precedence specified hi paragraph 2 of this
section, in solvent banks located therein, whether organized under
National or State laws, and whether member banks or not of the Fed-
eral Reserve S3^stem established by the act approved December 23,
1913, being subject to National or State supervision and examination,
willing to receive such deposits under the terms of the act and the
regidations made by authority thereof. The word ''bank" as used
in the law includes savings banks and trust companies doing a bank-
mg business.

2. If one or more member banks of the Federal Reserve System
exist in any city, town, village, or locality where postal savings de-
posits are made, such deposits are required to be placed in such mem-
ber banks, provided they qualify to receive them, substantially in
proportion to the capital and surplus of each such bank; but if such
member banks fail to qualify to receive the deposits, then any other
banks located therein and eligible as hereinbefore provided may
quahfy to receive them, and the deposits shall be placed in such
qualifying banks substantially in proportion to their capital and sur-
plus. If no bank eligible to qualify exists in any city, town, village,
or locality, or if none where such deposits are made will receive them
on the terms prescribed, then such funds shall be deposited under
the teiTQS of said act in the bank most convenient to such locality.
If no such bank in any State or Territory is willing to receive such
deposits on the terms prescribed, then the same are required to be
deposited with the Treasurer of the Board of Trustees. The law
requires that 5 per centum of the postal savings funds shall be ^\dth-
dra%\ni by the Board of Trustees and kept with the Treasurer in
lawful money as a reserve.

QUALIFICATION OF BANKS.

Sec. 4. Any eligible bank desiring to qualify for deposits of postal
savings funds shall transmit to the Third Assistant Postmaster Gen-
eral, Division of Postal Savings, Washington, D. C, an application
accompanied by a report showing fully the condition of the bank on
a day not more than one month prior to the date of such application.
Such report shall be sworn to by the president or cashier and attested
as con-ect by two members of the board of directors, who shall also
certify the amount of paid-m capital and unimpaired surplus, ex-
clusive of undivided profits. Blank application forms may be ob-
tained from the Third Assistant Postmaster General, Division of



REGULATIONS GOVEENHSTG DEPOSIT OF POSTAL SAVINGS FUNDS. 5

Postal Savings, Washington, D. C. No deposits will be made in any
bank until it shall have complied with the provisions of this section
and deposited securities which meet the requirements of section 8.

Sec. 5. Upon receipt of the appHcation required by section 4, prop-
erly completed, from a bank authorized to qualify under the law, the
Third Assistant Postmaster General will inform such bank of the
initial amount of bonds or other securities which it will be required to
deposit as security for postal savings funds.

2. A minimum initial deposit of bonds of the total par value of
$5,000 will be required from a bank qualifymg at a first-class post
office; of the total par value of S 1,000 at a second or third class
office; and of the total par value of $500 at a fourth-class office; but
no deposit of bonds of a total par value less than $500 will be accepted.
If warranted by the anticipated deposits, greater initial amounts of
securities than those above specified may be required.

3. Bonds or securities conforming to the requirements of section 8
and in the amount specified in the notification of the Third Assistant
Postmaster General shall be forwarded by the bank directly to the
Treasurer of the United States, Washington, D. C.^

4. Either registered or coupon bonds will be accepted, but all
registered bonds shall be registered in the name' of ''The Treasurer of

the United States, in trust for the Bank, of , as security

for postal savings funds." The Treasurer of the United States will
dispose of maturing coupons and checks covering interest accruing on
registered bonds as directed by the banks.

Sec. 6. The Third Assistant Postmaster General will inform the
Treasurer of the United States of the amounts of securities which
the respective banks are required to deposit. Upon receipt of such
securities, the Treasurer shall determine, as matter of fact, whether
the securities conform to the requirements of these regulations. He
shall then submit a statement of his findings to the Solicitor for the
Post Office Department, who shall determine, as matter of law,
whether such securities are legally acceptable under the act of May
18, 1916, and the regulations herein set forth, and who for that
purpose shall have access to the securities. No securities shall be
accepted until their legal acceptability has been determined by the
Solicitor for the Post Office Department.

2. If such bonds are accepted, the Treasurer shall issue his receipt
therefor in duplicate, forwarding the origmal to the Third Assistant
Postmaster General with advice of his action, and the dupUcate to
the bank depositing the secmities. If the bonds are held not to

1 To facilitate examination as to legal acceptabilitj' of securities, banks are requested to forward, at the
time the secui'ities are tendered, for the use of the Solicitor for the Post Oflice Department, certified
copies of final legal opinions as to the validity of such securities, or, if such opinions are not available,
certified transcripts of the recorded proceedings, including certificates covering the due execution and
sale of such bonds.



6 POSTAL SAVINGS SYSTEM.

conform to tlio requirements of the law or these regulations, they
shall be retained subject to the order and at the risk of the bank for
whoso account thoy were tendered, and the bank so notified. If
the bonds arc insufficient in amount, the bank shall be requested
by the Treasurer to furnish additional bonds.

Sec. 7. On receipt of notice from, the Treasurer of the United
States that the securities required of any bank have been received
and accepted, the Third Assistant Postmaster General will notify
such bank that it has qualified to receive deposits of postal savings
funds. He will state the amount fixed as the maximum balance
which may be held by such bank, and will instruct the proper post-
master to make deposits therein.

SECURITY FOR DEPOSITS.

Sec. 8. The Board of Trustees hereby prescribes and approves
such security in public bonds or other securities, authorized by act
of Congress or supported by the taxing power, as it deems sufiicient
and necessary to insure the safety and prompt payment on demand
of postal savings deposits, and fixes the value at which the securities
so prescribed and approved shall be accepted for the purposes named.
Such securities, in the amount so specified, shall be deposited with
the Treasurer of the Board of Trustees.

2. The Board of Trustees will accept as security for postal savings
deposits, at the respective values herein fixed, negotiable interest-
bearing bonds or securities, issued under express constitutional or
statutory provisions, of the following classes, viz :

(a) Bonds of the United States, of the Philippine Islands, of the
District of Columbia, and of Porto Rico, will be accepted at their
par value.

(h) Bonds of any State of the United States and of the Territory of
Hawaii will be accepted at their market value, but if such market
value is above par, they wUl be accepted at their par value.

(c) Bonds of any city or county in the United States havmg a
population of over 30,000, as shown by the latest reports of the
Bureau of the Census, and bonds of any school district in the United
States m which the whole or the major portion of any such city
is included, which city, county, or school district has been in existence
for a period of ten years, which for a period of ten years previously
has not defaulted in the payment of any part of either principal or
interest of any funded debt authorized to be contracted by it, and
whose net funded indebtedness does not exceed 10 per cent of the valu-
ation of its taxable property, to be ascertained by the last preceding
valuation for the assessment of taxes, will be accepted at 90 per cent
of their market value, but if such market value is above par, they will
be accepted at 90 per cent of their par value.



REGULATIONS GOVEENING DEPOSIT OF POSTAL SAVINGS FUNDS. 7

{d) Bonds of any city, town, borough, or village in the United States,
having a population of over 20,000 and not exceeding 30,000, as shown
by the latest reports of the Bureau of the Census, and bonds of any
school district in the United States in which the whole or the major
portion of any such municipality is included, which city, town, borough,
village, or school district has been in existence for a period of ten years,
which for a period of ten years previously has not defaulted in the
payment of any part of either principal or interest of any funded
debt authorized to be contracted by it, and whose net funded indebt-
edness does not exceed 10 per cent of the valuation of its taxable
property, to be ascertained by the last preceding valuation for the
assessment of taxes, will be accepted at 80 per cent of their market
value, but if such market value is above par, they will be accepted
at 80 per cent of their par value.

{e) Bonds of any other city, town, county, or other legally consti-
tuted municipality or district in the United States, which has been in
existence for a period of ten years, which for a period of ten years
previously has not defaulted in the payment of any part of either
principal or interest of any funded debt authorized to be contracted
by it, and whose net funded indebtedness does not exceed 10 per cent
of the valuation of its taxable property, to be ascertained by the last
preceding valuation for the assessment of taxes, wiJl be accepted at
75 per cent of their market value, but if such market value is above
par, they will be accepted at 75 per cent of their par value.

3. The term " net funded indebtedness," for the pul-poses of para-
graph 2, (c), (d), and (e), is hereby defined to be the difference between
the legal gross indebtedness of a city, town, county, or other legally
constituted mmiicipahty or district (includmg the amount of the
bonds of any civil division whose territorial limits are approximately
coterminous therewith) and the aggregate of the following items, when
included in such legal gross indebtedness:

(a) The total of all sinking funds accumulated for the redemption
of such gross indebtedness, except sinking funds applicable to bonds
hereafter described in this section.

(b) The amount of outstanding bonds or other debt obligations,
made payable from current revenues.

(c) The amount of outstanding bonds issued for the purpose of
providing the inhabitants of a municipahty with pubhc utilities:
Provided, That evidence is submitted showing that the income from
such utilities has proved to be sufficient for maintenance, for pay-
ment of interest on such bonds, and for the accumulation of a
sinking fund for their redemption.

(d) The amount of outstanding improvement bonds, issued under
laws which provide for the levying of special assessments against
abutting property: Provided, That evidence is submitted showing

54215°— 16 2



8 rOSTAL SAVINGS SYSTEM.

tliat assessments are levied in sufficient amounts to insure the pay-
ment of interest on the bonds and the redemption thereof.
- 4. The Board of Trustees reserves the right to reclassify the secu-
rities acceptable for deposits and to change the valuation at which
they will be accepted. Under no circumstances will securities of
other classes than those above named be accepted.

Sec. 9. Bonds of the several classes described in section 8, para-
graph 2, (b), (c), (d), and (e), to be acceptable as security, shall be the
general obligations of the States, Territories, counties, cities, towns,
or other poHtical divisions by or in behalf of which they are issued,
and payable, either directly or ultimately, without limitation to a
special fund, from the proceeds of taxes authorized to be levied upon
aJl the taxable real and personal property within the territorial limits
of such pohtical divisions: Provided, That in any case where the rate
of tax maybe subject to a constitutional or statutory limit, the Solicitor
for the Post Office Department may require satisfactory evidence that,
notwithstanding such limit, the interest and prmcipal of the bonds can
be paid after making due provision for current expenses, interest
and principal of outstanding debts, and other necessary charges.

Sec. 10. Obligations of the general class embracing what are
commonly known as "revenue bonds," "temporary bonds," "tempo-
rary notes," "certificates of mdebtedness," "warrants," and the like
obligations, whether issued in anticipation of the collection of taxes,
assessments, or other revenues, or of the sale of bonds or other obli-
gations, or for similar purposes, will not be accepted as security for
postal savings deposits: Provided, That, in applying this regulation,
consideration will be given to the legal status of the obhgations sub-
mitted rather than to the nomenclature employed in designating
such obligations.

Sec. 11. Bonds which in all other respects are found to be legally
acceptable as security under the postal savings act and these regu-
lations will be construed, as a matter of law, to conform to those
provisions of section 8, paragraph 2, (c), (d), and (e), respectively,
which relate to term of existence and nondefault, under the following
conditions:

(a) Bonds issued by or in behalf of any city, town, comity, or
other legally constituted mmiicipahty or district in the United
States which was, subsequently to the issuance of such bonds, con-
solidated with, or merged into, an existing pohtical division which
meets the requirements of these regulations, will be deemed to be the
bonds of such pohtical division: Provided, That such bonds were
assumed by such pohtical division imder statutes and appropriate
proceedings the effect of which is to make such bonds general obh-
gations of such assuming pohtical division, and payable, either
directly or ultimately, without limitation to a special fund, from the



EEGULATIONS GOVEEI^ING DEPOSIT OF POSTAL SAYINGS FUNDS. 9

proceeds of taxes levied upon all the taxable real and personal
property within its territorial limits.

(h) Bonds issued by or in behalf of any city, town, county, or
other legally constituted municipahty or district in the United States
which was, subseqiiently to the issuance of such bonds, wholly
succeeded by a newly organized poHtical division, whose term of
existence, added to that of such original poUtical division, or of any
other pohtical division so succeeded, is equal to a period of 10 years,
will be deemed to be bonds of such succeeding political division:
Provided, That durmg such period none of such political divisions
shall have defaulted hi the payment of any part of either principal
or interest of any funded debt authorized to be contracted by it:
And provided further, That such bonds were assumed by such new
political division under statutes and appropriate proceedings the
effect of which is to make such bonds general o])hgations of such
assuming pohtical division, and payable, either directl}- or ulti-
mately, without limitation to a special fund, from the proceeds of
taxes levied upon all the taxable real and personal property within
its territorial limits.

(c) Bonds issued by or in behalf of any city, towTi, county, or
other legally constituted municipahty or district in the United
States which, prior to such issuance, became the successor of one
or more, or was formed by the consoUdation or merger of two or
more, preexistmg pohtical divisions, the term of existence of one or
more of which, added to that of such succeeding or consohdated
poHtical division, is equal to a period of 10 years, wiU be deemed to
be bonds of a pohtical division which has been in existence for a
period of 10 years: Provided, Tliat durmg such period none of such
original, succeeding, or consolidated political divisions shall have
defaulted in the payment of any part of either principal or interest,
of any funded debt authorized to be contracted by it.

Sec. 12. The Treasurer of the Board of Trustees shall make exami-
nations semiannually, or oftener if he deems it necessary, of the
securities which have been accepted from qualified banks, and when-
ever, in his judgment, any of such securities have so far depreciated in
value as to make desirable the deposit of additional or new securities,
he shall inform the Third Assistant Postmaster General of the name
of the bank, the kind and amount of the securities, and the amount of
the depreciation. The Third Assistant Postmaster General will
notify the Treasurer and the bank of the amount of additional or new
securities which the bank shall deposit, and upon their receipt by the
Treasurer, the procedure provided in section 6 as to their acceptance
or rejection, and in section 22, as to the return of the origmal securi-
ties, if new securities are required, shall be followed.



10 POSTAL SAVINGS SYSTEM.



APPORTIONMENT OF DEPOSITS.



Sec 13. When more than one bank in any city, town, village, or
locality has qualified to receive postal savings funds, deposits of such
funds shall be apportioned substantially upon the basis of capital and
surplus as required by the act of May 18, 1916, and shall be made to
the credit of the Board of Trustees in such rotation and amounts as
wUl effect such apportionment, until the deposits reach the maximum
balance authorized for any bank. The banks concerned will be fully
informed in the premises.

2. An apportionment of postal savings fimds will apply in the case
of each qualified bank only to funds deposited after the date as of
which the bank qualified..

Sec. 14. After any apportiomnent of funds has been made in a
given locality, no other bank will be allowed to quahfy to receive
postal savings deposits except as of the 1st day of January, April
July, or October, unless the maximum amount of deposits applied
for by the banks already ciualified has been reached and such banlvS
have not qualified for additional funds. When a qualified member
bank of the Federal Reserve System in which the deposits have
reached the maximum authorized balance declines or fails to furnish
additional collateral and a local nonmember bank qualifies to receive
deposits, the member bank must await the next quarterly reappor-
tionment date before qualifying for additional funds. Apphcations
to quahfy under a reapportionment of the funds of any depository
ofiice shall be forwarded in sufficient time to reach the Third Assistant
Postmaster General, Division of Postal Savings, before the 15th day
of December, March, June, or September.

2. When the capital or surplus of a depository bank is increased or
reduced after it has qualified as a depository, the president or casliier
shall promptly certify to the Third Assistant Postmaster General,
Division of Postal Savings, the amount of such bank's paid-in cap-
ital and unimpaired surplus, exclusive of undivided profits, after such
increase or reduction, in order that proper reapportionment of the
deposits may be made among the banks affected as of the dates fii*st
above named.

INTEREST.

Sec. 15. Until further notice, banks which have qualified to receive
deposits of postal savings funds will be required to credit the Board
of Trustees with interest at the rate of two and one-half per cent per.
annum, as of January 1 and July 1 in each year, upon the average
daily balances of postal savings funds deposited with such banks,
as shown by the audited accounts of postmasters and other
agents of the Postal Savings System. Such mterest shall be com-
puted and entered as required bv instructions on the back of Form
PS 510.



REGULATIONS GOVERNING DEPOSIT OF POSTAL SAVINGS FUNDS. 11

2. The Board of Trustees will, from time to time, make such changes
in the rate of interest to be paid by qualified banks as it may deem
proper, subject to the minimum rate prescribed by the act of May 18,
1916, the rate adopted being uniform throughout the United States
and Territories thereof.

DEPOSITS OP FUNDS IN BANKS.

Sec. 16. Postmasters who deposit in qualified banks will be in-


1 3

Online LibraryUnited States. Post Office Dept. Postal Savings SyRegulations governing the deposit of postal savings funds in banks : and the acceptance of bonds as security therefor → online text (page 1 of 3)