People's Pilot, Volume 3, Number 42, Rensselaer, Jasper County, 6 April 1894 — VETOED. [ARTICLE]

VETOED.

The President Refuses to Sign the Seigniorage Bill. He Send* a Message to Congress Giving in Detail His Reasons for This Action— He Says the Bill is Neither Wise Nor Opportnne-Fall Text of the Veto* Washington, March 30. —The following is the fall text of the president’s message vetoing the Bland seigniorage bill; To the House of Representatives: I return without my approval house bill numbered 1930, entitled “An act directing the coinage of the silver bullion held in the treasury and lor other purposes." My strong desire to avoid disagreement with those in both houses of congress who have supported this bill, would lead me to approve It if I could believe that the public good would not be thereby endangered and that such action on my part would be a proper discharge of official duty. Inasmuch, however, as I am unable to satisfy myself that the proposed legislation is either wise or opportune, my conception of the obligations and responsibilities attached to the great office I hold forbids the indulgence of my personal desire, and inexorably coniines me to that course which is dictated by my reason and judgment, and pointed out by a sincere purpose to protect and promote the general interests of our people. Tile financial disturbance which swept over the country during the last year was unparalleled in its severity and disastrous consequences. There seemed to be almost an entire displacement of faith in our financial ability and a loss of confidence in otrr fiscal policy. Among those who attempted to assign causes for our distress it vras very generally conceded that the operation of a provision of law then in force which required the government to purchase monthly a large amount of silver bullion and issue its notes in payments therefor, was eilher entirely, or to a large extent, responsible for our condition. This led to the repeal on the Ist day of November, 1893, of this statutory provision. We had. however, fallen so low in the depths of depression, and timidity and apprehension had so completely gained control in financial circles that our rapid recuperation could not be reasonably expected. Our recovery has. nevertheless, steadily progressed, and though less than five months have elapsed since the repeal of the mischievous silver purchase requirement, a wholesome improvement is unmistakably apparent. Confidence in our absolute solvency is to such an extent reinstated and faith in our disposition to adhere to sound financial methods is so far restored as to produce the most encouraging results both at home and abroad. The wheels of domestic industry have been slowly set in motion and the tide of foreign investment has again started in our direction. Our recovery being so well under way, nothing should be done to check our convalescence; nor should we forget that a relapse at this timo would almost surely reduce us to a lower stage of financial distress than from which we are just emerging. I believe that if the bill under consideration should become a law it would be regarded as a retrogression from the financial Intentions indicated by our recent repeal of tho provision forcing silver bullion purchases; that It would weaken, if it did not destroy, returning faith and eonfldence in our sound financial tendencies and that as a consequence our progress to renewed busine-s health would bo unfortunately checked and a return to our recent ■distressing plight seriously threatened. This proposed legislation is so related to the currency conditions growing out of the law compelling tho purchase of stiver by the government, that a glance at such conditions and a partial review of the law referred to, may not be unprofitable. Detv aen the 14th day of August, 1830, when tie lav became operative, and the Ist day of November, 1893, when the clause It contained directing the purchase of silver was repealed, there wero purchased by the secretary of the treasury more than 188.000,000 ounces of silver bulliot. Inpayment for this bullion the government issued its treasury notes of various donom'natlons, amounting to nearly ,150,000,000, whirh notes were immediately added to the currene v in circulation among our people. Such notes were by the law made legal tender in payment of all debts, public and private, except when otherwise expressly stipulated, and were made receivable for customs, taxes and all pub. 11c dues, and when so received might be reis--BU£fl. They were also permitted to be held by (ine banking associations as a part of their lawtlal reserves.

the demand of the holdors these treasury 'notes were to be redeemed in gold or silver coin ■mi the discretion of the secretary of the treasury; but it waft declared as a part of this re- " demotion provision that it was “the established policy of the United States to maintain the two - metals on a parity with each other upon the 'ttfCSQnt legal ratio or such ratio as may bo proVluen byitftv.” • Tho money coined from such bullion was to be Standard silver dollars, und after directing the immediate coinage of a little less than 28,000,(X/0 ounces,, the law provided that as much of the. remaining bullion should be thereafter coine l as might be necessary to provide for tho redemption of the treasury notes issued on its purchase, and that “any gain or seigniorago arising from such coinage shall be accounted for and paid into the treasury." Thir, gain or seigniorage indicates so much of the bullion owned by the government as sho dd remain after using a sufficient amount to coin as many standard silver dollars as should equal In number the dollars represented by the tri asury notes issued in payment of the entire quantity of bullion. These treasury notes now outstanding and in circulation amount to ii 152,951,280, and although there has been thus far but a comparatively small amount of this bullion coined yet the so-called gain or seigniorage as above defined, which would arise from the coinage of the entire mass, has been been easily ascertained to be a quantity of bullion sufficient to make when coined fifty-five millions, one hundred and fifty-six thousand, six hundred and eighty-one standard dollars. Considering tho present intrinsic relation between gold and silver the maintenance of the parity between the two metals, as mentioned in this law, can mean nothing less than the maintenance of such a parity in the estimation and confidence of the people who use our money in their daily transactions.

Manifestly the maintenance of this parity can only be accomplished, so far as it is affected by these treasury notes, and in the estimation of the holders of tho same, by giving to such .holders, on their redemption, the coin, whether it is gold or silver, which they prefer. It follows that while in terms the law leaves* the •choice of coin to be paid ou such redemption to the discretion of the secretary of the treasury, •the exercise of this discretion, if opposed to the -demands of the holder, is entirely inconsistent with the effective and beneficial maintenance of the parity between the two metals. If both gold and silver are to serve us as .money, and if they together are to supply our •people a safe and stable currency, the necessity ■of preserving this parity is obvious. Such necessity has been repeatedly conceded in the platforms of both political parties and in our federal statutes. It is nowhero more emphatically recognized than in the recent law which repealed the provision under which the bullion now on hand was purchased. This law insists •upon the “maintenance of the parity in value of the coins of the two metals and the equal power of every dollar at all times in the markets and 4n the payment of debts.” The secretary of the treasury has, therefore, for the beet of reasons not only promptly complied with every demand for the resumption of those treasury notes in gold, but the present situation, as well as the letter and spirit of the law, appear plainly to justify, if they do not enjoin upon him. a continuation of such redemption. The conditions I have endeavored to pregent may be thus summar ised: First—The government has purchased and now has on hand sufflei nt silver bullion to permit the coinage of all the silver dollars neces«ary to redeem, in such dollars, the treasury note* issued for the purch; to of said sliver bullion and enough besides to cr In, as gain scitntoragu, 56,156.031 additions; itandard silver do)kn

Second—There are outstanding and now lr. circulation treasury notes issued in payment of the bullion purchased amounting to *152,931,J8a These notes are legal tender In payment of all debts, public and private, except when otherwise expressly stipulated, they are receivable for customs, taxes and all public dues; when held hg banking associations they may be counted as part of their lawful reserves and they are redeemed by the government in gold at the option of the holders. These advantageous attributes were deliberately attached to these notes at the time of their issue; they are fully understood by our people to whom such notes have been distributed as currency and have inspired confidence in their safety and value and have undoubtedly thus induced their continued and contented use as money, instead of anxiety for their redemption Having referred to some incidents which I deem relevant to the subject, it remains for me to submit a spec : fic statement of my objections to the bill now under consideration This bill consists of two sections, excluding one which merely appropriates a sum sufficient to carry the act into effect The first section provides for the immediate coinage of the silver bullion in the treasury which represents the so-called gain or seigniorage which would arise from the coinage of all tho bullion on hand, which gain or seigniorage this section declares to be ®55,156,681 It directs that the money so coined, or the certificates issued thereon, shall be used in the payment of public expenditures, and provides that if the needs of the treasury demand it, the secretary of the treasury may, in his discretion, issue silver certificates in excess of such coinage, not exceeding the amount of seigniorage in said section authorized to be coined. The second section directs that as soon as possible after the coinage of this seigniorage the remainder of the bullion held by the government shall be coined into legal tender standard silver dollars and that they shall be held in the treasury for the redemption of the treasury notes issued in the purchase of said bullion. It provides that as fast as the bullion shall be coined for the redemption of said notes they shall not be reissued, but shall be canceled and destroyed in amounts equal to the coin held at any time in the treasury derived from the coinage provided for, and that silver certificates shall be issued on such coin in the manner now provided by law. It, however, especially declared in said section that the act shall not be construed to change existing laws relating to the legal tender character or mode of redemption of the treasury notes issued for the purchase of silver bullion to be coined. The entire bill Is most unfortunately constructed. Nearly every sentence presents uncertainty and invited controversy as to its meaning and intent The first section is especially faulty in this respect, end it is extremely doubtful whether its language will permit the consummation of its supposed purposes. I am led to believe that the promoters of the bill Intended in this section to provide for the coinage of the bullion constituting the gain or seigniorage as it is called, into standard silver dollars; and yet there is positively nothing in. the sco'tion to prevent its coinage into any description of silver coins now authorized under any existing law. I suppose this section was also intended, in oase the needs of the treasury called for money faster than the seigniorage bullion could actually be coined, to permit the issue of silver certificates in advance of such coinage; but its language would seem to permit the issuance of such certificates to double tho amount seigniorage as stated, one-half of which would not represent an ounce of silver In the treasury. The debate on tills section in the congress developed an earnest and positive difference of opinions as to its object and meaning. In any event I am clear that the present perplexities and embarrassments of tho secretary of the treasury ought not to be augmented by devolving upon him the exeoution of a law so uncertain and confused.

lam not willing, however, to rest my objection to this section solely on these grounds; in my judgment sound finance does not commend a further infusion of sliver into our currency at j this time unaccompanied by further adequate ! provision for tho maintenance in our treasury of a safe gold reserve. Doubts also arise as to the meaning and construction of the second section of the bill. If the silver dollars therein ! directed to be coined are, as the section pro- i vides, to be held in the treasury for the re-! demption of treasury notes, it is suggested ■ that, strictly speaking, certificates canhot be 1 issued ou such coin “in the manner now pro- I vided by law,*’ bccauso these dollars are money ! held in the treasury for the express purpose of redeeming treasury notes, on demand. i Whatever else may lie said of the uncertainties of expression in this bill, they certainly | ought not to be found in legislation affecting I subjects so important and far-reaching as our finances and currency. In stating other and more important relations for my disapproval i of this section, 1 shall, however, assume that 1 under its provisions tho treasury notes issued - in payment for silver bullion will continue to ! be redeemod as heretofore, in silver or gold, at j the option of the holders; and that if when they are presented for redemption, or reach the treasury in any other manner, there are in the treasury coined silver dollars equal in nominal ( value to such treasury Dotes, then and in that ; case, the notes will be destroyed and silver cer- ! tifleates to an equal amount be substituted. I am convinced that this scheme is ill-advised ; and dangerous. j We have now outstanding more than 1338,000,- ! 000 in silver certificates issued under existing ! laws. They are serving the purpose of money usefully and without question. Our gold reserve, amounting to a little more than $100,000,0X), is directly charged with the redemption of 1340,1,00,000 of United States notes. When it is proposed to inflate our silver currency it is a timo for strengthening our gold reserve instead of depleting it I cannot conceive of a longer stop toward silver monometallism than we take when we spend our gold to buy silver certificates for circulation, especially in view of tho practical difficulties surrounding the replenishment of our gold. This leads mo to earnestly present the desirability of granting to the secretary of the treasury a better power than now exists to issue bonds to protect our gold reserve when for any reason it should bo necessary. Our currency is in such a confused condition and our financial affairs are apt to assume at any time so critical a position that it seems to me such a course is dictated by ordinary prudence. I am not insensible to the arguments In favor of coining the bullion seigniorage now in the treasury and I believe it could be done safely and with advantage if the secretary of the treasury had the power to is-ue bonds at a low rate of interest under authority in substitution ol that now existing and better suited to the protection of the treasury. I hope a way will present itscif in the near future for the adjustment of our monetary affairs in such a comprehensive and conservative manner as will accord to silver its proper place in our currency; hut in the meantime I atm extremely solicitous that whatever action wo take on this subject may be su-ch as to prevent loss and discouragement to our people at home and the destruction of confidence in our financial management abroad G HOVER CLEVELAND. Executive Mansion, March 29, 18j4.