The weekly clarion. [volume] (Jackson, Miss.) 1863-1882, 1881-04-07
THE FUNDING BILL.
The Issue Between the National
Banks and the Representatives of the
People.

1t Is known that the NATIONAL BANKS dlC
tated the veto Of the Funding Bill reducin
the interest on the public debt, because
required them to deposit bonds bearing
per cent. interest as security for the note
they put in circulation. They were nc
, willing to receive the same rate of interes
. allowed to other parties; and elaine
special exemption from the operations of tn
bill reducing the burdens upon the people
To show that the same feature of the bill
was supported by Mr.. Sherman and othe
financial leaders, we will introduce the fol
lowing extract from the speech of Repre-
sentative Carlisle, of Kentucky, March ID
1881:
In the first place, it provides, as amended
in the Senate, that from and after the Is
day of July next the 3 per cent. bond
| authorized by the bill, and no others, shall
be receivable as security for the circulating
notes of the National Banks and as security
for the safe keeping and prompt payment
of the public money deposited with such
banks.
This is certainly very plain and simple
! provision, and 1t seems to me that it re-
! quires much more ingenuity to pervert its
true meaning than it does to ascertain it
andyet for while a persistent attempt was
made to convince the public that if this pro-
! vision should be adopted all National
! Banks having and A per cent bonds on
| deposit to secure their circulation and pub
| lie deposits would be compelled after the
date named to withdraw them and substi-
tute bonds bearing per cent. or go into
| liquidation. 1t is almost impossible to
make an argument against such a construc-
| iG m Oft
it, as it is now conceded, | believe, every
where that there was not shadow of foun-
dation for it. 1t was one of the devices
adopted by interested parties to alarm the
banks and to preeipitate a resort by them
to the exercise of that dangerous power of
contraction conferred upon them by the act
of 1874; and in connection with other
statements equally groundless it actually
produced a rapid withdrawal of circulation,
which for a few days threatened disaster
and ruin to all the business interests of the
people.
Sir, this is not the first effort that has
been made in Congress to compel these
creatures and agencies of the Government
to assist it in reducing the interest charge
upon the people, and if it shall fail now it
will not be the first demonstration
of their power over the financial
legislation of the country, 1t is
tatives of the people to make, but it is
true nevertheless, than ten years ago, when
these institutions were fewer in number
than they are to-day, when their organiza-
ton was less perfect and when their COM
bined capital was not so great, they had
power enough to defeat in this House pro-
vision which was designed by the present
Secretary of the Treasury to compel them
to aid in funding large part of the public
a. nf nd < ( In lan Il
day OF February 1870, Mr.. Sherman, as
chairman of the Finance Committee in the
Senate reported back to that body, a
substitute for bill previously introduced by
Mr.. Summer, bill which after some amend
ments was finally passed and is now known
as the funding act of July II, 1870. The
bill as reported by Mr. Sherman provided
for the issue and sale of $400,000,000 of
bonds bearing interest at the rate of 5 per
cent, $400,000,000 bearing interest at the
rate of AZ per cent, and $400, 000,0 900 bear
ing interest at the rate of per cent. and
in order to create a certain market for
large part of these securities it contained in
its eighth section the following provisions,
which beg leave to submit for the consid-
Grafton of gentlemen who have denounced
what they have been pleased to call the
"forced loan" feature in the measure now
before us.
The bill with this eighth section passed
the Senate by vote of two to one. 1t was
finally defeated in the House, through the
influence IF the National Banks. Mr.. Car
Isle continued:
When this result became inevitable, by
reason of an active and determined opposi-
ton of the National Banks Mr.. Sherman,
who had been from the beginning an earnest
oJx Of 4ba
policy of the compulsory clause, announced
the fact to the Senate in a speech which
1 commend to the serious consideration of
gentlemen who are opposing this clause of
the fifth section. After stating that there
was "a very unreasonable and unnecessary
clamor raised by the banks against that pro-
vision" he said:
l wish now to record my deliberate judg-
ment that in this conclusion to which we
have been compelled to arrive by the action
of the House we are doing the National
Banks a great injury, which will impair
their influence and power among the people,
and that the opposition of the National
Banks to this provision which would have
required them to aid the funding of the
public debt, will tend more to weaken and
destroy them than anything that has tran
spired since their organization. | do not
see how we can 60 before the people of the
United States and ask them to lend us gold
at par for our bonds, when we refuse to re-
ouire agencies of our creation to take them
when we even refuse to require new banks
not yet organized to take these new bonds,
and when we refuse to require old banks,
which have made on the average from 10
to 20 per cent. annually upon the franchise
derived from the United States to aid us to
this extent in funding the national debt.
But, sir the vote of the House shows the
power Of the National Banks. tits so great,
at least in the House, that in order to Sc
cure funding bill we have been compelled
to abandon all provisions in regard to the
National Banks; but give notice that in
the future l for one shall be prepared at all
times to require the National Banks to take
that class of bonds which we propose in this
bill, and have no doubt this will be the
result. But for the present, in Difference to
the wishes Of the House, we have withdrawn
the section in regard to National Banks"
Now, sir, for the second time since the
organization of these institutions the rep
resentatives of the people find themselves
compelled in the discharge OF their public
duties to encounter the almost united OPP
position of more than two thousand corpora
! lions of their own creation-oppOsition to 3
| financial policy already approved by both
branches Of the legislative department.
and thus we are again confronted with the
naked question whether Congress or the
banks shall finally, determine what that
policy shall be.
| l will not discuss the question of good
| faith with the banks or their advocates
| Is not involved in this proposed legislation,
/ and cannot be introduced in the
1 debate except upon the utterly in
admissible theory that the Govern
ment and people of the United States are
hound bv some sort of compact to furnish
these institutions as long as they exist with
bonds bearing the same rate - - interest as
those now outstanding. They now hold ana
have on deposit $206, 4S6, ESQ in bonds bear
ing interest at the rate of and 6 per cent,
and by the express terms of the laws ander
| which they were created the Government
has right to redeem and cancel every one
of them at the end Of the current fiscal year.