Evening star. [volume] (Washington, D.C.) 1854-1972, 1881-03-03
Veto Of the Fundfng Hill.
MESSAGE OF THE PRESIDENT RETURNING tn
ELL TO CONGRESS WITH HIS OBJECTION
THBRETO,

BILL TO CONGRESS WITH HIS OBJECTIONS
THERETO.
The President to-day sent the following mes
sage to the House, vetoing the refunding bill:
To the House OF Representatives
Having considered the bill entitled "an act to
facilitate the refunding OF the national debt
am constrained to return It TO the House Of
REPRESENTATIVES,, IN which 1t originated. with
passage: The imperative necessity for prompt
action and the pressure Of public duties In this
closing week of my term OF Office compel me to
refra1n from any attempt to make full and
satisfactory presentation OF the objections to
the bill The importance OF the passage at the
present session of Congress OF suitable meas
which is about to mature, is generally recog-
nlzed. It has been urged upon the attention OF
congress by the Secretary OF the Treasury and
In my last annual message. IL successfully
accomplished 1t Will secure a large decrease In
the annual interest payment OF the nation, and
l earnestly recommend IL the bill before me
shall fail that another measure for this purpose
be adopted before the present Congress ad-
1ournS. While In my opinion it would be wise
10 authorize the Secretary OF the Treasury, In
his discretion to offer to the public bonds
refunding should not deem it my duty to in
terpose my constitutional objection 20 the pas
sage OF the present bill If 1t did not contain in
Its fifth section provisions, which, In my judg-
ment, seriously impair the value, and tend TO
the destruction OF the present national banking
system OF the country. This system has now
been In operation almost twenty years. No
safer or more beneficial banking system was
ever established. It's advantages as business
are free to all who have the neces-
saTy capital 1t furnishes currency to
the security Of the bill holder has probably
never been equaled by that Of any other bank
Ing system. Its notes are secured by the de-
posiJ with the government OF the interest bear
ing 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 rot an essential part of refunding
measure. It Is as follows:
"Sec. 5. sf'rom and after the 1st day of July,
1851, the per cent. bonds authorized by the
hrst section OF this act shall be the only bonds
receivable as security for national bank circu-
lation or as security for the safe-keeplng and
prompt payment OF the public money depos-
lted with such bank: but when any such
bonds deposited for the purpose atore-
or redemption by the Secretary OF the Treasury.
the banking association deposting the same
snail have the right to substitute other issues
Of the bonds OF the United States in lieu
tnereof: PROVIDED, That no bond UPON which
interest has ceased shall be accepted or con
t1nued Oh deposit as security for circulation, or
1or the safe keeIing of the public money, and In
drawn as provided at viii within thirty days
after interest has ceased thereon, the banking
association depositing the same shall be sub.
ject to the liabilities and proceedings on the
part OF tDe controller provided forin section
United States: And provided further
that section four OF the act OF June
Goth, 1874, entitled, AN act fixing the amount of
United States notes, providing for redl5trbu.
tion of the national bank currency and for
other purposes be, and the same Is hereby. re-
pealed, and sections 5l59 and 5160, of the Re-
V1sed Statutes be, and the same are hereby, re-
enacted"
Under this section it is obvious that no addl-
ttonal banks Will hereafter be organized except,
possibly, in few cities or localities where the
prevailing rates Of interest in ordinary busi-
ness are extremely low. No new banks can be
organized or no increase OF the capital Of exist
Ing banks can be obtained except by the pur
chase 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 issued by
the United States and bearing higher rate OF
interest than three per cent, and therefore
better security for the ill-hoider cannot, after
the lst OF July next, be received as security for
bank circulation. This is a radical change In
the banking law. 1t takes from the banks the
right they have heretofore had under the law
10 purchase and deposit as security for their
circulation any Of these bonds issued by the
United. States. and depriyes 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
taxation Of capital employed In oanSlng
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 govern
ment win. it is believed In large part Of the
country. be. a practical prohibition of the
organizing Of new banks to prevent the exist
Ing banks from enlarging their capital. The
national banking system, If continued at all,
already engaged In it, who may purchase gov
erIment bonds bearing a more favorable
rate OF interest than the three per cent. bond
prior to next gpy TO prevent the further
whole system by taking from 1t that feature
Which makes 1t as 1t now is banking system
free upon the same terms to all who wish to
engage In it. Even the existing banks VIII be
In danger OF being driven from business by the
additional disadvantages to which they will be
subjected by this bill. In short. cannot but
regard the fifth section Of the bill as step in
the direction OF the destruction of the national
banking sy stem.
our country, after long period of business
depression has Just entered upon
withdrawal OF the currency from circulation
by the national banks, and the enforced wind
Ing up OF the banks In consequence, would In
evitably 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 admir-
able 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 result Will be a disturbing
element In cur financial system. 1t Will de-
stroy confidence and surely check the growing
prosperity OF the country. Believing
That measure for refunding the national debt
is not necessarily connected with the national
banking law, and that any refunding act Will
defeat It's own object II 1t imperiled the ma
tional banking system or seriously impaired
Its usefulness; and convinced that section of
the bill before me would, II 1t should become
law. work great harm, l herewith return the
bill to the House OF Representatives for that
further consideration which is provided for In
the constitution. RUTHERFORD B. HAYES.
Executive Mansion, March 8, 1881.
The Presldent.EEect.
GEN. GARFIELDS CALLERS LAST NIGHT.
The following were among Gen. Garfeld's
callers yesterday after THE STAR went to press
and last evening Geo. 81. Pendleton, Secretary