Democratic Sentinel, Volume 5, Number 5, Rensselaer, Jasper County, 11 March 1881 — THE BILL. [ARTICLE]

THE BILL.

President Hayes’ Reasons for Vetoing; It* The following: is the message of President Hayes vetoing the Funding bill: To the House of Representatives : Having considered the bill entitled “An act to facilitate the funding of the national debt,” I am constrained to return it to the House of Representatives, in whieh it originated, with the following statement of my objections to its passage: The imperative necessity for prompt action, and the pressure of pdblic duties ib this, the closing week of my term of office, compel me to refrain from any attempt to make any fully satisfactory presentation of my db= jections to the bill. The importance of the passage at the present Session of Cotigress bf a suitable measure for refunding the national debt which is about to mature is generally recognized. It has been urged upon the attention of Congress by the Secretary of the Treasury, and in my last annual message. If successfully accomplished, it will secure » large decrease in the annual interest payments of the nation, and I earnestly recommend, if the MU before me shall fail, that another measure for the purpose be adopted before the present Congress adjourns. While, in my opinion, it would be wise to authorize the Secretary of the Treasury, in his discretion, to offer to the public bonds bearing 3% rr cent, interest in aid of refunding, should not deem it my duty to interpose my constitutional objections to the passage of the present bill if it did not contain in its fifth section provisions which, inmy judgment, seriously impair the value and tend to the destruction of the present nationalbanking system of the country. This system has now been in operation almost twenty years. No safer nor more beneficial banking system was over established. Its advantages as a business are free to all who bate the necessary capital It furnishes a currency to the ptiblie which, for convenience and security bf the bill-holder, has probably never been equaled by that of any other banking system. Its notes are secured by deposit with the Government Of interest-bearing bonds of the United States. Tho section of the bill before me which relates; to the national-banking system, and to Which objection is made, is not an essential part of a refunding measure. It is as follows: Section 5. From and after the first day of July, 1881, the 8-per-cent, bonds authorized by the first section of this act shall be the only bonds receivable as security for the safe keeping and prompt payment of the public mouoy deposited with such banks, but when any such bonds, deposited for the purposes aforesaid, shall be designated for purchase or redemption by the Secretary of the Treasury, the banking association depositing the same shall have the right to substitute other issues of the bonjjs of the United States in lieu thereof; provided that no bond upon which interest has ceased shall be accepted or continued on deposit as security for circulation or for the safe keeping of the public money, and in case the bonds so deposited shall not be withdrawn, as provided by law, within thirty days after interest has ceased thereon* the banking association depositing the same shall be subject to liabilities and proceedings on the part of the Comptroller provided for in seotion 5,234 of the Revised Statutes Of the United States; and provided further, that section 4 of the act of June 30, 1874, entitled “An act fixing the amount of United States notes and providing for the redistribution of national-bank currency, and for other purposes,” be and the same is hereby repealed, and sections 5,159 and 5,160 of th< Revised Statutes be and the same are herebj re-enacted. Under this section it is obvious that no additional banks will hereafter be organized, except, possibly, in a few cities or localities where the prevailing rates of interest in ordinary business are extremely low. No new banks can be organized, and no increase of the capital of existing banks can be obtained, excopt by the purchase and deposit of 3-per-cent, bonds. No other bonds of the United States can be used for that purpose. The sl,000,000,000 of other bonds recently issued by the United States, and bearing a higher rate of interest than 3 per cent., aud, therefore, a better security for the bill-holder, cannot, after July 1 next, be receiveed as security for bank circulation. This is a radical change in the Banking law. It takes irom the banks the right they have heretofore had under the law to purchase and deposit as security for their circulation any of the bonds issued by the United States, and deprives the bondholder of the best security which the banks are ab e to give, by requiring them to deposit bonds having the least value of any bonds issued by the Government. The average rate of taxation Of capital employed in banking is mote than double the rate of taxation upon capital employed in other legitimate business. Under these circumstances, to amend the banking law so as to deprive the banks of the advantage of securing their notes by the most valuable bonds issued by the Government .will, it is believed, in a large part of the country be a practical prohibition of the organizing of new banks, and prevent existing banks from enlarging their capital. The national-banking system, if continued at all, will bo a monopoly in tho hands of those already engaged in it, who may purchase Government bonds bearing a more favorable interest than the 3-per-cent, bonds prior to next July. To prevent the further organization of banks is to put in jeopardy the whole system by taking from it that feature that makes it as it now is, a banking system free, upon the same terms, to all who wish to engage in it Even the existing banks will be in danger of being driven from business by the additional disadvantages to Which they will be subjected by tbis bill. In short, I cannot but regard the fifth section of the bill as a step in the direction of the destruction of the national banking system of our country, which, after along period of business depression, has just entered upon a career of unexampled prosperity. The withdrawal of currency from circulation by the national banks and the enforced winding up of the banks in consequence would inevitably bring serious embarrassments and disaster to the business of the country. Banks of issue are essential instruments of modern commerce. If the present efficient and admirable system of banking is broken down, it will inevitably be followed by a recurrence to other and inferior methods of banking. Any measure looking to such a result will be a disturbing element in our financial system. It will destroy confidence and surely check the growing prosperity of the country. Believing that the measure for refunding the national debt is not necessarily connected with the National Banking law, and that any refunding act will defeat its own object if it imperiled the national-banking [system or seriously impaired its usefulness, and convinced that section 5 of the bill before me would, if it should become a law, work a great harm, I herewith return the bill to the House of Representatives for that further consideration which is provided for in the constitution. (Signed) Rutherford B. Haves. Executive Mansion, March 3,1881.