Lancaster daily intelligencer. [volume] (Lancaster, Pa.) 1864-1928, 1881-03-04
HAYES LAST HITCH.
HE vETOES THE FUNDING BILL AS
ONE OF HIS FINAL ACTS.
he Believes that 1t 10 Not Right to Take
Away Certain Privileges from National
Banks, and Thinks the 1siil Would
prevent the Organization
of New Banks.

He Believes that 1t is Not Right tn Take
Away Certain Privileges from National
Banks: aud In'nks M the I'll! Would
of New Banks.
The following is tine message of Mr..
Hayes vetoing the funding hill
To the House Of Representatives.: Hav-
ing considered the bill entitled s. An act
to facilitate the refupding of the national
debt" am constrained to return it to the
house in which it originated with the fol-
lowing statement OF my objections to
it's passage The imperative necessity
the public duties in this closing week
of my term of Office. compel me to re
fran from any attempt to make full
and satisfactory presentation Of the objec-
tions to the bill. The Importance of the
passage at the present session of Congress
of suitable measure for the refunding Of
the national debt, which is about to ma
ture, is generally recognized. 1t has been
urged upon the attention of Congress by
the secretary of the treasury, and in my
last annual message. If successfully ac-
complished it will secure large decrease
in the annual interest payment Of the Ia
tion, and l earnestly recommend it the bill
before me shall fail, that another measure
for this purpose be adopted before the
present Congress adjourns. While in my
opinion it would be wise to authorize the
secretary of the treasury in his discretion
to offer to the public bonds bearing three
and a-half per cent. interest in aid of re-
funding, l should not deem it my duty to
interpose my constitutional Objection
to the passage of the present bill if it
did not contain in it's fifth section pre-
visions which, in my judgment, seriously
impair the value and tend to the destruc-
ton of the present national banking sys
TEN of the country. This system has now
been in operation almost twenty years.
No safer nor more beneficial banking sys-
tenn was ever established Its advantages
as business are free to all who have the
necessary capital. 1t furnishes q currency
to the public which for convenience and
tho security of the bill-holder has prob
ably never been eIualled by that of any
other banking system. It's notes are Sc
cured by the deposit with the government
of the 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 the refunding measure.
1t is as follows: "Section 5. From anil
after the first day of July. 1881, the three
per. centum BONDS authorized by the first
section of this act shall be the only bonds
receivable as security for national bank
circulation or rs security for the safe keep
ing and prompt payment of the public
money deposited with such bank but
when any such bonds deposited for the
purposes 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 substitute the issues Of
the bonds Of the United . States in
lieu thereof, provided that no bond
upon which interest has ceased shall be
accepted 0: continued Oh deposit as secu-
rity for circulation or for the safe keeping
of the public money and in case bonds
SO deposited shall shall not be withdrawn
as provided by law within thirty days
after interest has ceased thereon, tho
banking association dcpOsiting the same
shalt he subject to the liabilities and pro-
cecdings Oh the part Of the controller pro-
vided for in section ), 234 of the revised
statutes of the United States and pro
vidcd further. that section four Of the act
| of June 90. 1874, entitled al act fixing the
amount of United States notes providing
for the redistribution of the national bank
currency, and for other purposes be and
the same is hereby repealed and sections
5, 159 and 5, 160 of the revised statutes be,
and the same are hereby rc-enacted."
Under this section it is obvious that
10 additional banks will hereafter he Or
ganized except, possibly, in u few cities
or localities where the prevailing rates of
interest in ordinary business are extremely
low. No new banks c;sn he organized and
no increase of the capital OF existing banks
can be obtained except by the purchase
and deposit of the 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 a higher ate of interest
than three per cent, and therefore
a better security for the bill holder. can
not after the first OF July next be received
us security for bank circulation, This is
4 radical change in the funding law. It.
takes from the banks the right they have
heretofore had under the law to purchase
and deposit as security fortheir circul ,tion
any of the bonds issued by the United
States, and deprives the bill holder Of the
best security which the banks are ablo to
give by requiring them to deposit bonds
having the least value Of any bonds issued
by the government.
The average rate of taxationSof capital
employed in banking is more than double
the rate of taxation upon capital en-
plOyed in other legitimate business. Un-
der these circumstances, to amend the
banking law so rs 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 large
part of the country, be practical prohi-
bition of the organizing Of new banks and
prevent tire 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 good bonds bearing Il more
favorable rate of interest than the three
per cent. 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 it
as it now is, a banking system free upon
the same terms to all who wish to engage
in it. Even the existing banks will b. in
danger of being driven from business by
the additional disadvantages to which
they will be subjected by this bill.
In short, I cannot but regard the fifth
section of the bill as a step in the direction
of the destruction of the national banking
system.
Our country after a long period
of business depression has just entered
upon career of unexampled prosperity.
ne tJ,r,