The Democratic press. [volume] (Ravenna, O. [Ohio]) 1868-1901, 1881-03-10
THE VETO MESSAGE.
A Surrender to the National Banks
WASHINGTON, March 3.-The follow
! ing Is the veto message of the funding

1
bill.
To the House Of Representatives:
Having considered
the bill entitled an act to facilitate the
funding 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 objections to its passage: The
imperative necessity for prompt action
and the pressure of public duties III
this closing week Of my term or Of
flee, compel me to refrain from any
attempt 10 make full and satisfactory
presentation of the Objections to the
bill. The importance of the passage
at the present session of Congress of
a suitable measure for the refunding
of the national debt which is about to
mature, is generally recognized, and
has been urged upon the attention of
Congress BY the Secretary of the
Treasury, and i'll my last annual mes
sage. Ii successfully accomplished, it
will secure large decrease in the an
nuai interest payment of the nation,
and | earnestly recommend that if the
bill before Congress shall fail, that
another measure ior this purpose be
adopted before the present Congress
adJourns. While in my opinion it
would be wise to authorize the Secre-
tary of the Treasury in his discretion
TO offer to the public bonds bsaring
31a per cent. interest, in aid OF refund
ing. l should net deem it my duty to
interpose my constitutional objection
to the passage of the present bill, if it
did not contain in its fifth section pro-
visions which, in my judgment, seri-
ously impair the value and tend to the
destruction OF the present national
banking system of the country.
This system has now been in opera
ton almost 20 years. No safer or more
beneficial banking system was ever
established. lis advantages IS bu-
siness are free TO all who have the nee
essary capital. 1t furnishes currency
to the public whica, for the conven-
iencc and the security OF the bill-hold-
cr, has probably never been eQualed
by that of any other banking system
Its notes are secured by the deposit
with the government of the interest
bearing bonds. The portion of the
bill before me, which relates to the
national banking system, and to which
objection is made, is not an essential
part of a refunding measure. 1t is as
follows:
Section From and after July l,
1881, the three per cent. bonds, author
lied 10y this act, shall be the only bonds
receivable as security for national
bank circulation, or as security for the
safe keeping ard prompt payment OF
the public money deposits with such
banks, but when any such bonds are
deposited for the purpose aforesaid,
they shall be designated for the pur-
chase for redemption by the Secretary
Of the Treasury. The banking asso-
Citations depositipg the same shall have
the right to substitute other issues OF
bonds of the United States in lieu
thereof, provided that no bond upon
which interest has ceased shall be ac-
cepted or continued on deposit as Sc
curity fer the safe keeping OF the pub
lie money and in case bonds so de-
posted shall not be withdrawp, as
provided, at will, within thiSy days
after the interest has ceased thereon,
the bank association depositing the
same shall be subject to liabilities and
ON the part of the Comp
iroiler, provided for in section 523i OF
~
States; and provided further, that
section of the act of June 20, 1874,
entitled An act fixing the amount of
United States Notes. providing for
of the nationaI bank
and for other purposes, be,
and the samei is hereby repealed, and
sections 5l59 and 5I6O of the revised
: 'atutes be and the same are hereby
re enacted.
Under this section ii is Obvious that
no additional banks viii! hereafter be
except possibly in a few
cities Or localities where the prevail
ing rates of interest in ordinary basi
ness are extremely low. No new
banks can bs organized, and no in
crease of capital OF existing banks can
be obtained, except by purchase and
deposit of per cent. honda. No 9th
er bonds of the United States can be
used for the purpose. The one thou
sand millions Of other bonds recently
issued by the United States, and bear
ing hig her rate of interest than 3 per
cent, and therefore better security for
-he bill holder, cannot after the lst of |
July next be received as security for |
bank circulation.
This is radical change in the bank
ng law. 1t takes from the banks o !
light they have heretofore bad under |
he lew TO purchase and deposit as Sc
,uiity for their circulation any of the |
bonds issued by the United States, and |
ieprives 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 |
oOnds issued by tbs government. The |
average rate of taxation of capital |
mpioyed in banking is more than |
double the rate of taxation upon cap !
tai employed i'll e;her eGiIimate bu
'iness. Under these circum stances, 10 |
amend the banking law so as TO de |
1riYe the banks of the advantage OF
securing their notes 10y the most vaiu-
.ble bonds issued by the government, |
will, 1t is believed, in a large part of |
he country be practical prohibition |
,f the organizing new banks and pre-
'ent existing banks from eniarging
heir capital. The national banking
ystem, If continued at all, will be a
in the hands OF those al
eady engaged in it who may purchase
government bonds bearing more IA
orable rate OF interest than three per
ent. bonds. prior to next July. To
,reyent further organization of banks
5 10 put in jeopardy the whole sys-
EN- by taking from it that feature
hat makes it, SIS it now is, banking
ystem free upon the same terms to
ii who wish to engage in it. Even
xisting banks will be IN danger, being
.riven from business by additional
Disadvantages to which they will be
objected by this bill
In short. cannot but regard the
fth section OF the bill as step in the
ERECTION OF the destruction of the
atisnal banking system. Oar coun
y, after long period of business
epression, has just entered upon a
areer Of unexampled prosperity. The
of currency from cIrcuia