Iron County register. [volume] (Ironton, Iron County, Mo.) 1867-1965, 1881-03-10

AhE Aoho"AAx - w n4ySSeB0 Va ~
ident Hayes, vesoingt the Funding bin;
To the House Of preGehtse1vss: "a
Having considefsd tAe bin entitled Fan oct
TO facilitate the fpndineof the Nsfionai eebt,"
lam constrained to rettrn II to the House of
Representatives, in which 1t originated, with
the following statement OF my objections 70
Its passage; Tho imperative necessity for
prompt action, and the pressure of public
duties in this, the closing week Of my term Of
ONCE, compel me to refrain from any attempt
to make any fully satisfactory presentation of
my objections to the bill. The importance of
the passage at the present session OF Con-
Eress OF Q suitable measure for refuudinS the
National debt which is about to mature IL
generally recognized. It has been urged upon
the attention OF Congress by the Secretary Of
the Treasury, and in my last annual message.
II successfully accomplished, ft win secure
large decrease in the annualfnterest payments
OF the Nation, and I earnestly recommend that
If the bill before me shall fail. another
measure for this purpose be adopted before
the present Congress adjourns. while, I'm my
opinion, ft would DO wise to authorize the
Secretary Of the Treasury. in his discretion, to
oner to the public bonds bearing az per cent.
interest In aid Of refunding, I should not
deem It my duty to interpose my Constitu-
tional objection to the passage Of the present
bill If 1t did not contain i'm fits NTH sec
ton provisions which, IN my Judgment,
seriously impair the value and tend TO the de-
struction of the present National Banking
system of the country. This system has now
been In operation almost twenty years. No
safer nor more beneficial banking system was
ever established. Its advantages N busia ess
are free to all who have the necessary capital.
1t furnishes a currency to the public which,
for convenience and security of 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 fnterest-bearing bonds of the United
States. The section OF the biz before me which
relates to the National Banking system, and
to which objection is made, is not an essential
part of q refunding measure 1t is as follows:
"SECTION 8. From and after the first day
of July, 1881, the three-per-cent. bonds au-
thorfzed by the first section of this act
shall be tho only bonds receivable as security
for National Bank circulation, as security
for the safe keeping and prompt payment OF
the public money deposited with such banks,
but when any such bonds, deposited tor the
purpose aforesaid, shall be designated for
purchase or redemption by the Secretary of
the Treasury, the banking association de-
posting the same shall have the right to sub
stitute other issues of the bonds OF the
United States in lieu thereof: provided that no
bond upon which interest has ceased shall
be accepted or continued on deposit as secu-
rity for circulation or for the safe keeping OF
the public money. and in case the
bonds so deposited shall not DO withdrawn. as
provided by law, within thirty days after inter
est has ceased thereon, the banking associa-
ton depositing the same shall be subject to
liabilities and proceedings on the part of the
Comptroller provided for in Section 5,24 OF
the Revised Statutes of the United States; and
provided further, that Sections of the act of
amount of United States notes and providing
for the redistribution Of National Bank cur.
rcncy and for other purposes be and the
same is hereby repealed, and Sections $50 and
5,16O of the Revised Statutes be and the same
are hereby reenactcd.'
Under this section ii is obvious that no add
tional banks will hereafter be organized, ex-
cept possibly in 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 CAPT.
tai OF exist " banks can be obtained, except
by the purchase and deposit of three per cent
bonds. No other bonds ofthe United States can
be used for that purpose. The one thousand
millions of other bonds recently issued by the
United States, and bearing a higher rate Of in
terest than three per cent, and, therefore, n
better security for the bill-holder. cannot,
after the Ist of July next, be received as secu-
rity for bank circulation. This is q radical
change in the Banking law. 1t takes from the
banks the right they have heretofore had I'M
der the law topurchase and deposit as securi-
~ for their circulation any Of the bonds issued
by the United States, and deprives the bill
holder of the best security which the banks are
able 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 bank
ing Is more 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 lnge
part Of the country lie a practical prohibition
Of the ORGANIZING OF new banks, and prevent
existing banks from enlarging their capital.
The National Banking system, IL con-
tinued at all, will be monopoly
in the hands of those already engaged
in it, who may purchase Government
bonds bearing more favorable interest than
the three-per-cent. bonds, prior to next July.
To prevent the further organization OF banks
is to put in jeopardy the whole system by tax
ing from IL that feature that makes il. as |: now
is, q banking system FREQ. upon the same
terms, to all who wish to engage In 1t. Evon
the existing banks will be in danger Of being
driven from business Dy the ADDITIONAL disnCi-
vantages to which they will be subjected, by
this bill. . .....- a. al
In snort, cannot but regard the fifth SEQ
ton of the bill us q step in the direction of
the destruction of the National Banking sys-
tenn Of our country. which, after a long pc
Rod of business dep-ession has just entered
upon q career of uneXampied prosperity.
The withdrawal of currency from circulation
by the National Banks and the enforced wind
ing up of the banks In consequence, would
inevitably bring serious embarrass-
ments and disaster to the business of the
country. Banks of issue are essential instru-
ments of modern commerce. IL 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. 1t will destroy confidence
aud surely check the growing prosperity OF
the country.
Believing that the measure for refundng
the National debt is.not necessarily connected
with the National Barking law and that any
Refunding act will defeat ITS own object II IL
Imperfect the National Banking system or Sc
riously impaired its usefulness, and convinced