Belmont chronicle. [volume] (St. Clairsville, Ohio) 1855-1973, 1881-03-10
VETOED.
THE PRESIDENT RETURNS THE
FUNDING BILL TO CONGRESS,
Together With His Reasons for
Withholding His Approval
of its Provisions.

ASnINGTON, March 3.--The follow
ing is the message Of the President We
toeing the Funding bill:
Having considered the bill entitled
AN act to facilitate the refunding of
the National debt" l am constrained to
return it to the House of Representa-
;iveS. in which it originated. with the
following statement of my objections to
its passage. The imperative necessity
for prompt action and the pressure of
public duties in this, the closing week OF
my term of office, compel me to refrain
from any attempt to make a full and
satisfactory presentation of the Cbjec-
tions to the bill. The Importance of the
passage ut the present session of Con-
gresS of suitable measure for refund
ing that portion of the National debt
which is about to mature, is generally
recognized. 1t has been urged upon the
attention of Congress by the Secretary
of the Treasury and in my last annual
message, and if succt ssfully accomplish
ed it will secure large decrease in the
annual interest payment of the Nation,
and earnestly recommend if the other
bills before you shall wait that another
measure for this purpose be adopted be-
fore the present Congress adjourns.
While in my opinion it would be wise
to authorize the Secretary of the Treas
ury in his discretion to offer to the pub
lie bonds beariug 3 115 per cent interest in
aid of refunding, should not deem it
my duty to interpose my constitutional
objection to the passage of the present
bill if it did not contain in its fifth sec
tion provisions which in my Judgment
seriously impair the value and tend to
the destruction of the present National
banking system in this country. This
most twenty years. No safer nor more
beneficial banking system was ever es-
tablished Its advantages as a business
are free to all who have the necessary
capital. 1t furnishes currency to the
pablic which for convenience and the
security of the bill holder has probably
never been equalled by that of any other
banking system. Its notes are secured
by deposit with the Government of
interest bearing bonds. 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 refunding measure. 1t is as
follows:
SEC. 5.-From and after July first,
1881, three per cent bonds, au nOriZed by
the first section of this act, sh;il be the
only bonds receivable as security for
National Bank circulation, or lis securi-
ty for the safe keeping and prompt pay
ment of public money deposited with
such banks, but when any such bonds
deposited for the purpose aforesaid shall
be designated for purchase or redemp-
tion by the Secretary of the Treasury,
the banking association depoSiting the
same shall have the right to substitute
other issues of bonds of the United
States in lieu thereof, provided no bond
upon which the interest has ceased,
shall be accepted or continued Oh de-
posit as security for the circulation or
for the safe keeping of public money,
and in case the bonds so deposited shall
not be Withdrawn, as provided by law,
within thirty days after the interest has
ceased thereon, the banking association
the same shall be subject to
the liabilities and proceedings on the
part of the Comptroller provided for in
section 1924 of the Revised Statutes of
the United States; and provided further,
that section four of the fact of June so,
1874, entitled, "An act fixing the amount
of United States notes, providing for the
redistribution of national bank curren-
ey, and for other purposes" be, and the
same is hereby repealed, and sections
5,15S and 5,18O of the Revised Statutes
are hereby re-enacted.
Under this section it is obvious that
no additional banks will hereafter be
except possibly in a few cities
or localities where the prevailing rates
of interest in ordinary business are ex-
tremely low. No new banks can be or
ganized, and no increase of the capital of
existing banks can be obtained except
by the purchase and deposit of three per
cent bonds No other bonds of the Uni
ted States can be used for the purpose.
There are one thousand millions of other
bonds recently issued by tie United
States, and bearing higher rate of in
terest than three per cent, and, there
fore, a better security for the bill hold
ers, which can not, after the first of
July next, he received as security for
bank circulation. This is radical
change in the banking law. 1t takes from
the banks the right they have hereto
fore had under the law to purchase and
deposit as security for their circulation
any of the bonds issued by the United
States, and deprives the bill holder of
the best security which the banks are
able to give, 10y requiring them to de-
posit bonds having the least value of
any bonds issued by the Government.
The average rate of taxation of the cap
ital employed in banking is more than
double the rate of taxation upon the
capital employed in other legitimate
business. Under these circumstances,
to amend the banking law so as to de-
prive the banks of the advantage of Sc
curing their votes by the most valuable
bonds issued by the government, will, it
is believed, in large part of the coun-
try, be Il practical prohibition of the or
ganizing of new banks, and prevent ex-
isting banks from enlarging tEeir capi-
tai. The national banking system, if