Postal savings systems were offered by many nations' post offices to provide depositors who did not have access to banks a safe, convenient method to save money and to promote saving among the poor.
The first nation to offer such an arrangement was Great Britain in 1861. It was vigorously supported by Sir Rowland Hill, who successfully advocated the penny post, and William Gladstone, then Chancellor of the Exchequer, who saw it as a cheap way to finance the public debt. At the time, banks were mainly in the cities and largely catered to wealthy customers. Rural citizens and the poor had no choice but to keep their funds at home or on their persons.
The original system was limited to deposits of £30 a year with a maximum balance of £150. Interest was paid at the rate of two and one-half percent per year on whole pounds in the account. Later the limits were raised to a maximum of £500 a year in deposits and no limit on the total. Within five years of the establishment of the system there were over 600,000 accounts and £8.2 million on deposit. By 1927, there were twelve million accounts—one in four Britons—with £283 million on deposit. The British system was spun off into an independent bank, Girobank.
Many other countries adopted such systems, but they have generally been abolished or spun off like Girobank.