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240 system would add to their temptations and the risk of defalcation.

Secondly, the difficulties in working the system are greatly enhanced in this country by the wide territory over which it must extend, to at all meet the requirements of the people.

Thirdly, the banking branch of the Post-Office Department could not be made self-sustaining, and at the same time pay a rate of interest that would draw deposits. It is not likely that 3 per cent, would be satisfactory when there are perfectly sound banks that can pay five per cent.; and yet 3 is probably more than the Department could afford to pay. Following the rule of the English system, and the only safe one, it must invest its deposits in Government securities, on which it cannot now realize more than four per cent. Out of the half per cent, margin must come all expenses and the loss of interest on unused balances. The Department could not even take the very necessary precaution of keeping a cash reserve against deposits, and though it may be said that the degree of confidence would be so great as to preclude a run, and so no reserve would be needed, it will be found that if the Government, through any of its departments, goes into banking, it will be amenable to the rules that govern banking operations. It could be readily shown, if space permitted, that the Department would be a constant dealer in bonds, buying on a high market, and selling on a low one—a process not conducive to profit—and it is highly probable that from these various causes the chronic deficit of the mail-service would be increased by the losses incurred in the banking department, a result which could not be defended on any tenable ground.

Next, as concerning State inspection. It is certainly remarkable that a system which has been tried so fully and failed so utterly, should still be so implicitly relied on; that men, who pride themselves on being practical, and who never fail to have their little fling at theorists, should cling to a theory that has broken down whenever tested.

Official examination has had a very thorough trial in this country; it has been a feature of the national banking system since its organization in 1864; the history of these banks has, as a whole, been creditable, but scores of them have failed, many disgracefully, and the worst of them in localities where it might be expected that the examinations would be most thorough; while the life-insurance companies and savings-banks of New York have long been objects of legislative solicitude and official care, with results that do not need to be told here.

The theory of State intervention in such matters is fallacious; private enterprise, if left to itself, would compass the desired end much better than any governmental machinery. The indorsement which the State gives to a new institution, by granting a charter and nominally assuming a supervisory control, endows it with an air of respectability and solidity which it could not otherwise command, and which is for the most part illusive. If depositors understood that their sole reliance was the character of the men they were dealing with, and that the only supervision would be such as they chose to exercise, they would soon come to select the guardians of their savings with greater care, and scan their acts more closely.

The State has a legitimate function which it has very imperfectly fulfilled in this connection; it is competent to enforce the performance of contracts; to visit punishment upon negligent or dishonest officials; to secure prompt and inexpensive justice to the sufferers in event of failures. This has not been done, but instead, contracts have been shamelessly broken with impunity; felony has been openly compounded; and