POSTAL MONEY-ORDER SERVICE. A governmental agency, operating through the post offices, to promote public convenience in remitting small sums of money, and to ensure greater security in the transfer of money through the mails.
Notwithstanding the fact that England has been successfully operating a money-order serv ice since the year 1839, the need for such a facility in the United States does not appear to have been recognized until about 1857. On 31 January of that year Postmaster-General Camp bell furnished the chairman of the Committee on the Post Office and Post Roads of the House of Representatives, on his request, with an outline of a plan for a postal money-order system such as might be put in operation in this country, but no action appears to have been taken in the matter. In the annual report of the depart ment, dated 1 Dec. 1857, it was stated that the adoption of some method for the more con venient and safe remittance of small sums of money through the mails by means of orders had been frequently urged as a matter worthy of attention. The first definite recommenda tion made by the department, however, appeared in the annual report for 1862. Postmaster General Blair in setting forth therein reasons for the exclusion as far as practicable of money from the mails recommended the adoption of a money-order system as one of the remedies for the evils resulting from the common practice of enclosing currency in letters.
No action having been taken upon the rec ommendation, it was renewed in the annual report of the department for 1863, Postmaster General Blair expressing the opinion that such a system *would not only prove a great con venience to civilians and soldiers, but would almost entirely obviate the loss of many letters, the great majority of which enclose small re mittances.* The money-order service finally was author ized by Congress in the act approved 17 May 1864, and on 1 November of that year the sys tem was put in operation. The service was inaugurated at 141 offices, which had been des ignated by the Postmaster-General in accord ance with the authority conferred upon him by the money-order act. In making the selection of the new-fledged money-order offices, it was deemed expedient to designate first the larger post offices and then to extend the service to others as rapidly as possible. This method
resulted in a register of 419 offices equipped for the transaction of money-order business at the end of the first year of operation.
Measures were early taken to extend the service to the army, and the fact that money orders to the amount of $403,776.80 were drawn at the great centres of military operations dur ing the first eight months of the system's ex istence is evidence of the extensive use to which it was put by the soldiers in sending money to their families and friends.
For a number of years following the close of the Civil War, the government itself was a patron of the system. Money-orders amounting to many thousands of dollars annually were issued on the application of the War Depart ment for the payment of claims for bounty and back pay due by the United States to colored soldiers for services during the war, the organ ization of the money-order service rendering valuable assistance in insuring the proper pay ment of the claims.
One of the means provided by the act ap proved 13 June 1898 to meet expenditure caused by the Spanish War was the collection of a tax of two cents on each domestic order issued. The collections began 1 July 1898 and ceased 30 June 1901, by repeal of the law. During this period the system collected for and paid to the Internal Revenue Service $1,931,481.94, without any expense whatever to the Treasury Depart ment and with practically none to the Post Office Department.
Aside from the ordinary service which it renders the citizen by affording him the practi cal result of a checking account in making pur chases and settling financial obligations by mail, the money-order service of the United States is now used by the foreign-born population to send money to relatives and to the postal-sav ings banks in their own countries. Many per sons in the past have found the money-order system a convenience for the temporary deposit of funds for safekeeping by having the order drawn on the office of issue and in their own names. The establishment of a postal-savings system in this country, however, served to re duce the amount of money sent to postal-sav ings banks abroad and to curtail the use of the money-order service for savings purposes.