National Republican. (Washington City (D.C.)) 1872-1888, 1881-03-04
o. DIVIDEND NOTICE,
THE FUNDING-BILL VETO.
Message of the President 10 Congress With
His Objections.

His Objections.
As was foreshadowed in THE REPUBLI
CAN, the President sent the following message t
Congress yesterday, vetoing the funding bill
To The House Of Representatives:
Having considered the bill entitled can &C
to facilitate the refundlng of the national debt
am constrained to return il to the Hous,
of Representatives in which it originated with tn,
following statement of my objections to its passage
The imperative necessity for prompt action and tn,
pressure OF public duties in this closing week of my
to make full and satisfactory presentation of the
objections to the bill. The importance of the pass
age at the present session of Congress of suitable
| measure for the refunding of the national deb
| which is about TO mature is generally recog.
| nized. 1t has been urged upon the attention O
Congress by the Secretary of the Treasury and in
my last annual message. If successfully accom-.
plished it will secure large decrease in the an.
nual interest payment of the Nation, and earn
estly recommend if the bill before me shall
fail that another measure for this purpose be
adopted before the present Congress adjourns
While inmy opinion 1t would be wise to authorize
the Secretary of the Treasury in his discretion to
offer to the public bonds bearing three and q
half per cent. interest in aid of refunding
should not deem it my duty to inter
pose my constitutional objection to the
passage of the present bill if il did not contain in
IFS fifth section provisions which, in my judg-
mcnt, seriously impair the value, and tend to the
destruction of the present national banking system
of the country. This system has now been in oper-
alton almost twenty years. No safer or more bene-
fetal banking system was ever established Its
advantages as business are free to all who have
the necessary capital. 1t furnishes currency to
the country which for convenience and the secur-
ity of the bill-hOlder has probably never been
equaled by that of any other banking system It's
ment 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 essential part of
q refunding measure. 1t is as follows:
Sec. g. From and after the LIST day of July, 1881
the three per cent; bonds authorized by the first
ceivable as security for national bank circula-
ton or as security for the safe-keeping and
prompt payment of the public money deposited
with such bank; but when any such bonds
deposited for the purpose aforesaid shall be desip
mated for purchase or redemption by the Secretary
of the Treasury, the banking association depositing
issues of the bonds of the United States in lieu
thereof: HOvided That no bond upon which
interest has ceased shall be accepted or con
tinued on deposit as security for circulation or
for the safe keeping of the public money and in
case bonds so deposited shall not be withdrawn as
provided by law within thirty days after interest
posting the same shall be subject to the liabilities
and proceedings on the part of the controller
provided for in section 52S4 of the Revised Stat
utes of the United States. And provided further
that section of the act of June 90 1874 entitled
An act fixing the amount of United States
notes providing for redistribution of the national
bank currency and for other purposes be, and the
same is hereby repealed, and sections 5159 and
$50, of the Revised Statutes be. and the same are
Under this section 1t is obvious that no adfi-
tional banks viii hereafter be organized except.
possibly, in q few cities or localities where the
prevailing rates OF interest in ordinary bust
organized or no increase of the capital of exist
ing 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 forthe mr.
pose. The one thousand millions of other bonds
recently issued by the United States and bearing
higher rate of interest than three Der cent and
no Il hold
not afterth July next be received rs security
for bank circulation. This is a radical change in
right they have her ctofore had under the law TO
purchase and deposit as security for their circula-
ton any of these bonds issued ythe United States
and deprives the bill-holder of the best security
Which the banks are able to give by recurring
them TO deposit bonds having the least value Of !
any bonds issued by the Government. The aver
age rate Of taxation Of capital employed in bank
capital employed in other legitimate business.
Under these circumstances to amend the banking
Jaw so as 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..o large part Of the cOun
organizing of new banks to prevent the existing
banks from enlarging their capital The national
banking SYSTEM, If continued at all, will be a
in the hands of those already engaged
in it, who may purchase Government bonds
bearing more favorable rate of interest than tbe
three per cent. bond prior to next July. To pre-
jeopardy the whole system by taking from it that
feature which makes il as it now is banking sys-
TEN free uDon the same terms to all who wish to |
engage in it. Even the existing banks win be in
danger of being driven from business by the adj |
ditional disadvantages 10 which they will be sub
lected by this bill In short cannot but regard |
the fifth section OF the bill step in the destruc-
ton OF the national banking system.
Our country, after long period of business de- !
preston, has last entered upon career of unex-
ampled prosperity. The Withdrawal of the cur |
rency from circulation by the national banks and |
The lnforced winding up of the banks in conse- |
Quence, would inevitably bring serious embarrass-
nentS and disaster to the business of the country
Banks of issue areessential instruments of modern
commerce. If the present efficient and admir- |
able system Of banking is broken down. il will |
inevitably be followed by q recurrence to other
and inferior methods of banking. ANY measure
looking 70 such q result will be a disturbing
element IN our financial system. It will DESTROY
confidence and surely check the growing pros
perity of the country. Believing that measure
or reiund!ng the national debt is not necessarily
;onncctedwith the national banking law, and thSt
my reminding act will defeat its own object if il
the national banking system or seri-
,usly impaired its usefulness; and convinced that
section five of the bill before me would if II should
become law, work great harm. herewith return
he bill to the House of Representatives for that
urther consideration which is provided for in the
Constitution. RUTHERFORD b. HAYES
Executive Mansion, March ), 1881