Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1881-03-04

WASHINGTON, March Following is the
message of the President vetoing the funding
bill:
To the House of Representatives: Having
considered the bill entitled San Act to facili-
tate the refunding of the national debt,
an constrained to return it to the House of
Representatives, in which it originated, with
the following statement of my
OBJECTIONS TO ITS PASSAGE:
| The imperative necessity for prompt action,
and the pressure of public duties in this
closing week of my term Of Office,
compels me to refrain from making full
and satisfactory presentation of my obiec-
lions to the BILL The Importance of the
passage at the present session of Congress of
suitable measure for rsfunding the national
debt, which is about to mature is generally
recognized. 1t has been urged upon the at
tention 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 pay
ment of the nation, and 1 earnestly recon-
mend, if the bill before you shall fail, that
another measure for this purpose be adopted
before the present Congress adiourns. While
in my opinion it would be wise to authorize
the Secretary of the Treasury, in his discre-
ton. to offer to the public bonds bearing 81
per cent. interest in aid of refunding, should
not deem it my duty to interpose my consti-
tutional objection to the passage Of the pres
ent bill il it did not contain in its fifth section
provisions which in my judgment seriously
impair its value and tend to the destruction
| of the present
NATIONAL BANKING SYSTEM OF THE COUNTRY
This system has been in operation almost
twenty years. No safer nor more beneficial
banking system was ever established. It's
have the necessary capital. 1t furnished cur
rency 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 interest
bearing bonds of the United States. The
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
refunding measure. 1t is as follows:
The above authorized three per cent bonds,
after May l, 1881, shall be the only bonds re-
ceivable as security for National Bank circu-
| lation or for public money deposited. When
so deposited, if named for purchase or re
demption by the Secretary, the bank deposit
ing may substitute other Issues of United
States bonds in their stead, but no bond on
which interest has ceased shall be accepted,
or continue on deposit as security and in
case bonds so deposited are not withdrawn in
thirty days after interest has ceased, the bank
depositing shall beisubject to the liabilities OF
Section 3, 235, Revised Statutes of United
| States. The fourth section, Act of June 20,
1874, g Providing for redistribution CT Ma.
tional Bank currency" is repealed, and Sec
lions j, $50 and 5, 100, Revised Statutes are
re-enacted. And provided further, nothing
in this Act shall be so construed as to repeal
or modify or in any manner affect Sections
1920, 5,221, 1922. 1928 and 5 224 Of the Re-
vised Statutes of the United States.
Under this section it is obvious that no ad.
ditioual banks will hereafter be organized,
except possibly in few cities or localities
where the prevailing rates of interest in
ordinary business are high. No new banks
can be organized and no increase of capital OF
the existing banks can be obtained, except
by the purchase and deposit of three per
cent bonds. No other bonds Of the United
States can be used for the purpose. The one
thousand millions of other bonds recently is
sued by the United States, and bearing
higher rate of interest than three per cent,
and therefore a better security for the bill
holder, cannot, after the 1st Of July next, be
received as security for the banks circula-
ton. This is
RADICAL CHANGE
In the banking law. 1t takes from the
banks the right they have heretofore had I'M
der the law to purchase and deposit as securi-
ty for their circulation any Of the bonds
issued by the United States, and depriyes
the bill-holders 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 aver
age rate of the taxation of capital employed
in banking is more than double the rate OF
taxation upon the capital employed
in other legitimate business. Under
these circumstances, to amend the
banking law SO as to deprive the
banks of the advantage of security for
their notes by the most valuable bonds issued
by the Government will, it is believed, in
large part of the country be practical pro-
hibition of the organization of new banks,
and prevent the existing banks from charging
their capital. The national banking system,
if continued at all, will be a monopoly in the
hands of those already engaged in it, who
may purchase Government bonds bearing
more favorable rate of interest than three
percent bonds prior to next July. To pre-
vent the further organization of banks Is to
put in jeopardy the whole system, by taking
from it that feature that Makes as it is now,
a banking system free upon the same terms
to all who wish to engage in if. Even the
existing banks will be in danger of being
driven from business by the additional disad
vantages to which they will be subjected by
this bill. In short, 1 cannot but regard the
fifth section of the bill as step in the direc-
ton of the destruction of the national bank
ing system. Our country, after long period
of business stagnation, has just entered upon
CAREER OF UNEXAMPLED PROSPERITY.
The withdrawal of currency from circula-
lation by the national banks and the enforced
winding up of the banks in consequence,
would inevitably bring serious embarrassment
and disaster to business. The country banks
of issue are essential instruments of modern
commerce. If the present efficient and adj
mirable system of banking is broken down, it
will inevitably be followed by recurrence
to other and inferior methods of banking.
Any measure looking to such a result Will be
disturbing element in our financial system.
1t will destroy confidence and surely check
the growing prosperity of the country. Be
lieving that the measure for refunding the
| lobL 81. fo1