The Dallas daily herald. [volume] (Dallas, Tex.) 1873-1887, 1881-03-04
THE FUNDING BILL
The Presidents Veto of the Bill on
the Grounds That 10 Tends 10 the
the Destruction of the Present
National Banking system
of the Country.

the presluent nessss,e on the Iunulns OIL
to the house Of representatives:
Having considered the bill entitled An Act
to Facilitate the Reiunding of the National
debt l am constrained to return it to the
house of representatives, in which it origi-
mated, With the following statement Of my
objection TO its passsge: The imperative
necessity for prompt action and pressure
of the public duties in this closing week Of
my term Of office, cumpels me to refranfrom
any attempt to mako full ana satisfactory
presentation Of MY objections TO the bill.
Tie Importance of the passsgo at the
present session Of congress Of suitable
measure FOR the reiunding of the national
debt which is about to mature is generally
recognized 1t he's besn urged upon the
attention of congress by the secretary of the
treasury and in my last annual message II
successfully accomplished it will secure
large decreasein the annual interest payment
of the nation, aud earnestly recommend
that if the bil before me should luil that
another measure for this purpose DO adopted
before the present congress adjourns. While
In my opinion it would DO wise to authorize
the secretary of the treasury in his discretion
to Otler TO the public bonds bearing IL
per cent interest in aid of refu1ding, | should
not deem 1t my duty 80 iIterpose any con
stilutional objections TO the passage cf the
present bill II it did not contain IN lis fifth
section propositions which 10 my judg-
ment seriously impaired its value
and tend TO the destruction of
the preseaG national backing system Of the
country This system has now been in opera
tion ssn'"st twenty years. No mora Bone
hclal banking system was ever established.
z It's advantages rs 10 business are free 10 all
who have the necessary capital. Ii furnishes
currency to the public which for convenience
and security of the bill holders have never
been equsiled by that Of shy other banking
system. Its notes are secured by deposit
with the government Of interest bearing
bonds Of the Uh.ed States.
The section ofbil before me which relates
TO tho national banking system and TO which
objection is made, is not All essential part of
the refundng measure. 1t is as follows:
ne then quotes the filth section Of the bill
Under this section it is obvious
that no additional bank hereafter can
be organized excep! in few
cities and localities where the prevailing
rates OF interest in ordinary business are ex-
tremely low. No new banks eau be organ.
lZed and no increase of capital of existing
banks can be ordained, except by the pur-
chase and deposit Sf per cent. bonds. No
other bonds of the United States can be used
for this purpose. The ono thousand million
OF other bonds recently issued by the Uuited
state, ard bearing higher rats of interest
than per cent. and therefore better secu.
rty Tor tie DILL holder, cannot after the first
OF July next be received as security for bank
circulation. This is q radical change in the
banking law 1t takes from the banks the
right they have heretofore had under the
law to purchase or deposit rs security for
their circulation any OF the bonds issued by
the United States and deprives the bill holder
OF the best security which banks sre able to
give by requiring them to deposit bonds is
sued by the government. The average rate
OF taxation OF the capital employed in banl-
ing is more than double tho rate of tax alton
on the capital employed in other legitimate
business Under these circumstances, to
amend the banking law so AS to deprive
banks OF tho advantage of securing their
notes oy the most valuable bonds issued
by the government will, it ia believed, 10
large part OF the country be a practical pro-
, hibl,ion CT the organizing Of new banks md
prevent existing banks from enlarging their
capital; the national banking system, if con-
tinued at all, Will be a monopoly in the
hands of those already engaged in it, who
may purchase government bonds bearing q
more favorable rate of interest than
the 8 per cent. bond prior TO
next July. To prevent further
organization of bonds is TO put in jeopardy
the whole system, by taking from II that
feature that makes it us il now is, a banking
system free upon the same terms to all who
wish to engage in 1t. Evcn the existing
banks will DO iu danger of being driven from
business by additional disadvantages TO which
they will be subjected by this bill. 10 short,
cannot but regard the 9th section of the bill
rs step in the direction of do.
stroyiDg the national banking system
Our country after 90 long pc.
rod of business depression has Just entered
upon career of pnexemptei prosperity.
The withdrawal of currency from circulation
by national banks, and the enforced winding
up OF banks in consequence, would inevitably
briRg serious embarrassment and disaster
to the business of the country. Banks of
issue are essential instruments of modern
commerce. If tho present efficient and ad .
mirablo system Of banking Is broken down it
will inevitable DO followed by recurrenc,
to other and inferior modes Of banking. and
q measure looking 20 such result will DO
disturbing element in our financial system.
II will destroy confidence and surety and
check tho growing prosperity of the country.
Believing that a measure for the refundiug
of the national debt Is not necessarily con.
nected with national banking law
and that any refunding act will defeat
its own object, irhperil the nationsl
banking system or seriously impair its use.
fulpess, and convinced of lis usefulness and
convinced that section oftbe bill before me
would, 1t 1t should bscome law, work great
harm, l herewith return the bill to the house
Of representatives Cor their further considera-
zion, which is provided for in the constitu-
zion. [signod.l
r. b. HAYES.
Executive Mar Mon, March 8, 1881.
The SprngucI Trial Set Down for